Autumn Budget 2024

The Autumn 2024 Budget announcement by Chancellor Rachel Reeves introduces a range of impactful measures for UK charities, with a focus on social support, essential services and tighter fiscal regulations. While charities may benefit from specific funding increases, they also face heightened costs and new regulatory changes. Here’s a breakdown of the key announcements relevant to the voluntary sector:

Key accounting and tax budget highlights for charities

Employer National Insurance Contributions Increased to 15%

As part of efforts to bolster government funding, employer National Insurance Contributions (NIC) will rise to 15%. For charities – particularly smaller ones or those with high staffing needs – this change will significantly increase payroll costs. Combined with the 6.7% increase in the National Living Wage, these changes highlight the importance of proactive budgeting for charities. Those heavily reliant on part-time or freelance staff may feel this pressure acutely, and some organisations may need to seek additional support to absorb these rising expenses. Additionally, the threshold for employer NIC has fallen from £9,100 to £5,000.

Changes to VAT and Business Rates Relief for Private Schools

The Budget also removes VAT and business rates relief for private schools. Although this measure does not directly impact all charities, it represents a shift in funding policy that will affect the independent education sector, potentially leading to increased demand for scholarships and support from education-focused charities.

New Legislation to Prevent Charity Tax Rule Abuses

In a move to ensure that charitable tax advantages are not misused, the government is introducing new legislation to prevent abuse of charity tax rules. This legislation aims to close loopholes and ensure that tax reliefs are used strictly for charitable purposes. Charities will need to review their financial practices to ensure compliance with these regulations, which will help maintain public trust in the sector’s integrity.

Other matters relevant to charities

The Budget also introduces several funding increases that may benefit charities working in local communities. Local government funding will rise by 3.2%, with £600 million earmarked for social care, indirectly supporting charities that collaborate with councils to provide essential services for vulnerable groups. An additional £1 billion for SEND services is set to expand educational and healthcare support for young people with complex needs, strengthening resources for charities working in this area. Charities will also benefit from continued energy price support, with an emphasis on energy efficiency measures to help manage rising costs. Lastly, new funding for volunteering initiatives aims to boost community engagement, offering charities new resources to support volunteer-led programmes and strengthen local social networks.

Navigating the opportunities and challenges

The Autumn 2024 Budget offers both opportunities and challenges for the charity sector. The increase in local government funding, SEND support and volunteering initiatives provides valuable resources. However, rising operational costs, such as the National Insurance increase to 15%, VAT changes for private schools and reduced cultural funding present financial pressures. Additionally, new anti-abuse legislation requires charities to ensure rigorous financial compliance.

In conclusion, the Autumn 2024 Budget reflects a government approach geared toward supporting essential services, workforce stability and fiscal responsibility. Charities are encouraged to stay engaged with local councils, actively manage costs and ensure compliance with new regulations to make the most of the resources available while adapting to the new financial landscape.

Guidance here