Charities have struggled most with a “lack of warning” from the government about the impending increase in employer national insurance contributions (NICs), MPs were told this week.
In Westminster yesterday, Charity Finance Group (CFG) deputy CEO Claire Mills said many charities were struggling to rebudget in time for the NICs rise next month following the policy’s announcement last October.
Addressing the All-Party Parliamentary Group on Charities and Volunteering, Mills said: “Having to sit down, whether you’re the finance and audit committee of your charity, or the finance scheme or finance director, and go: ‘Oh, we’ve just done all the work on the budget this year and we’ve got our next three-year plan in place, and now we’ve got a massive hole in it.’
“All that work needs to be redone, and we now need to find more places to cover that money.”
Mills’ remarks echoed a recent call on the government from the Directory of Social Change (DSC) to delay the NICs increase for charities until 2026 to allow trustees more time to plan for the tax rise.
Meanwhile, MPs are due to debate recent attempts by peers to exempt smaller charities from the tax increase this week.
Charities ‘fighting for survival’
Mills added that out of a recent survey that CFG conducted of almost 450 charity sector professionals, 87% were worried about the affordability of the increase in employer NICs.
Meanwhile, 67% of respondents said their charity was cancelling development plans, and 61% were considering measures such as recruitment freezes and possible redundancies in relation to managing staff numbers in the face of the NICs increase.
On the survey findings, Mills said: “I think that’s one of the things we really want to understand – how the charitable sector can play its role in helping the government fulfill its missions, or in helping improve society and the people who need support across the whole of the country when at the same time, our organisations are fighting for survival.”
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