Rachel Reeves MP, Chancellor of the Exchequer delivered Labour’s first Budget last month. Whilst Scotland has received an additional £3.4bn and it would feel that budgets for Scotland are moving in the right direction with an air of optimism, the increase of National Insurance Contributions will hit charities.
Responding to the Autumn Budget 2024, Voluntary Action Shetland’s Executive Officer Lynn Tulloch said:
“Local Charities and Voluntary Organisations are facing uncertainty and future significant financial challenges with stand still budgets, having difficulties in sourcing core funding, working with yearly grants with no guarantee of future funding and having to look at supporting on-going activity with their reserves/self-generated funding to continue to operate at their current level”
At the moment, employers pay a rate of 13.8% on employees' earnings above a threshold of £9,100 a year. In the Budget, Chancellor Rachel Reeves said this rate would increase to 15% in April 2025, and the threshold would be reduced to £5,000.
In order to help the smallest businesses, the employment allowance - which allows companies to reduce their National Insurance liability - will increase from £5,000 to £10,500.
While smaller organisations will be supported by the welcome increase in Employment Allowance, other voluntary sector employers will be significantly impacted by these changes.
Last week John Swinney John Swinney urges UK government to cover NI hike for charities - BBC News urged the UK government to cover National Insurance increases for Scottish charities, GPs, social care providers and universities.
The first minister said the tax increase announced in the autumn Budget had caused "alarm across the country".
We are looking forward to see how our key responses throughout the Third Sector can help to alter this course.
