Employer NICs increase

From April 2025, the increase in employer NICs from 13.8% to 15% has placed additional financial strain on charities (who were not exempted from these increases). With the threshold lowered to £5,000, many organisations are facing higher payroll costs, with the National Council for Voluntary Organisations (NCVO) estimating an annual cost to the sector of £1.4bn. This change clearly affects budgeting, staffing decisions and overall financial planning. Whilst additional increases in the rate or adjustments to the NI threshold are not expected at the 2025 Budget (though equally not ruled out), there is speculation that the Chancellor will look to go further and remove or otherwise alter NICs exemptions for pension contributions within salary sacrifice schemes, leading to additional costs for both employers and employees.

Charities must therefore prepare to reassess their employment structures and consider cost-saving measures. Accountants and other advisers will need to support clients in understanding the implications and exploring options such as part-time roles, outsourcing or restructuring to maintain service levels without compromising financial health. It is essential to remember to claim the Employment Allowance. See this link Employment Allowance: What you’ll get – GOV.UK

Further information: click here.

If you have any questions, then please feel free to get in touch with Michaela Johns on 023 8046 1256 or email Michaela Johns.