MPs reject exemption for small charities from National Insurance hike

ThirdSector has reported that MPs have rejected a bid by peers to exempt small charities from the 1.2 percentage point increase which is due to come into effect in April.

Last month, the House of Lords had passed an amendment to the National Insurance Contributions Bill that would have given an exemption to charities with annual incomes of less than £1m.

James Murray, the Exchequer Secretary to the Treasury, said that “Charities, particularly small charities, will benefit directly from changes that we have made to the employment allowance, which is more than doubling from £5,000 to £10,500.” He said: “There was £6bn for tax relief for charities and their donors in the tax year to April 2024 through features that will continue in the tax year that we are entering.”

Richard Sagar, head of policy at the Charity Finance Group, said the membership body was disappointed the amendments were not accepted. He said research conducted by the CFG showed that 41 per cent of charity leaders it polled in February said they had cancelled expansion plans, plans for new staff or new services that would otherwise have been expected to go ahead, with a further 23 per cent saying they were likely to do so.

“Many small charities deliver essential support for people across the country, and many of them will now be faced with a difficult decision regarding cuts to these services, which will in turn impact greatly on those who need them,” he said.

“We hope that the Chancellor’s Spring Statement and Spending Review can provide better news for the sector which is much needed.”