Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of changes to employer National Insurance contribution rates on third sector organisations; and whether she plans to take steps with Cabinet colleagues to provide additional funding to charities to support them with these costs.

The Government recognises the important role charities play in our society, and has made it a priority to develop a Civil Society Covenant recognising the sector as a trusted and independent partner.

Within the tax system, we provide support to charities through a range of reliefs and exemptions, including reliefs for charitable giving. The tax reliefs available to charities are a vital element in supporting charitable causes across the UK, and our tax regime for charities is among the most generous of anywhere in the world with more than £6 billion in charitable reliefs provided to charities, CASCs and their donors in 2023 to 2024. The biggest individual reliefs provided are Gift Aid at £1.6 billion and business rates relief at nearly £2.4 billion.

To repair the public finances and help raise the revenue required to increase funding for public services, the government has taken the difficult decision to increase employer National Insurance.

The Government recognises the need to protect the smallest businesses and charities, which is why we have more than doubled the Employment Allowance to £10,500, meaning more than half of employers with NICs liabilities either gain or see no change next year. Charities will still be able to claim employer NICs reliefs including those for under 21s and under 25 apprentices, where eligible.

The Government has committed to provide support for departments and other public sector employers for additional Employer NICs costs only. This is the usual approach the Government takes to supporting the public sector with additional Employer NICs costs, as was the case with the previous Government’s Health and Social Care Levy.