The government has been encouraged to delay the upcoming increase to employer National Insurance Contributions (NICs) for charities to allow trustees more time to plan for the tax rise.
In a submission as part of the government’s ongoing spending review, the Directory of Social Change (DSC) suggested the NICs rise could be delayed until 2026 to enable charities to secure income to pay the extra costs.
DSC urged the government to alter the NICs thresholds to reduce the impact of the rise on medium-sized charities.
It also called on the government to increase funding for local governments and health commissioners so they are able to cover the NICs rise and inflation increases in their contracts with charities.
Chancellor Rachel Reeves has refused to exempt or reimburse charities’ estimated additional £1.4bn tax bill per year when NICs rise from 13.8% to 15% from April.
EU replacement funding
DSC also urged the government to work with the voluntary and community sector to provide long-term EU replacement funding.
Following the UK’s exit from the European bloc, the government launched its Shared Prosperity Fund to cover some of the funding shortfall for local communities.
However, as the fund closes, DSC urged the government to implement a long-term successor scheme that matches the amount of funding lost from leaving the EU.
DSC encouraged financial support for struggling councils and called for “robust mechanisms” for small charities to engage with local commissioners as part of the government’s devolution plans.
The organisation called on the government to reintroduce a requirement for companies to report charitable donations in their annual reports.
It also called for above-inflation increases to the budgets of charity regulators in all UK nations, with additional funding for the Charity Commission to enhance and update its register of charities.
DSC made previous recommendations to government as part of the Civil Society Group last month.
The result of the spending review is due to be announced on 11 June.
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