The UK government’s recent budget announcement introduces several fiscal measures that will impact charitable giving and the operations of charitable organisations. Understanding these changes is crucial for donors and charities alike.
Key Budget Measures Affecting Charities:
- Increase in Employer National Insurance Contributions (NICs): Effective from April 2025, employer NICs will rise from 13.8% to 15%, with the threshold lowered from £9,100 to £5,000. Although the allowance exempting the first £5000 is increased to £10,500 These changes, combined with increased minimum wage, could increase employment costs for charities, potentially affecting their staffing and service delivery. Our grants for charity projects will be in higher demand than ever, and we anticipate increased pressure on the voluntary sector’s core costs.
- Adjustments to Inheritance Tax (IHT): The budget includes reforms to IHT, such as removing certain exemptions and freezing the current threshold until 2030. These changes may influence estate planning and charitable bequests. If you’re reviewing your will, our Legacy information can be found here.
- Modifications to Gift Aid: Discussions are underway to streamline the Gift Aid process, potentially automating tax rebates on donations. While this aims to encourage philanthropy, the exact impact on charities and donors will depend on the final implementation. Gift Aid only applies to UK-based charities, meaning community foundations are an ideal way to give locally, with this 25% boost from HMRC and which we can apply to community groups as well as to charities.
Supporting Local Communities:
In light of these developments, the role of community foundations like ours becomes even more vital. By pooling resources and directing grants to local charities for their projects, we can help mitigate the financial pressures they face, ensuring continued support for those in need.
How You Can Help:
- Donate Locally: Contributing to your community foundation ensures that funds are allocated to address pressing local needs effectively.
- Stay Informed: Understanding the evolving fiscal landscape enables you to make informed decisions about your charitable giving.
By working together, we can navigate these changes and continue to support the invaluable work of local charities in our community.