Community / National insurance rise concern from third sector
VOLUNTARY Action Shetland’s (VAS) executive officer has expressed concern over the impact increased national insurance contributions could have on the third sector.
Lynn Tulloch warned that local charities and voluntary organisations are “facing uncertainty and future significant financial challenges”.
She added that these challenges include “stand still budgets, having difficulties in sourcing core funding, working with yearly grants with no guarantee of future funding and having to look at supporting on-going activity with their reserves/self-generated funding to continue to operate at their current level”.
UK Government chancellor Rachel Reeves MP announced in October that national insurance contributions would rise for employers.
At the moment, employers pay a rate of 13.8 per cent on employees’ earnings above a threshold of £9,100 a year.
In the budget, Chancellor Rachel Reeves said this rate would increase to 15 per cent in April 2025, and the threshold would be reduced to £5,000.
In order to help the smallest businesses, the employment allowance – which allows companies to reduce their National Insurance liability – will increase from £5,000 to £10,500.
VAS said while smaller organisations will be supported by the welcome increase in employment allowance, other voluntary sector employers will be “significantly impacted” by these changes.
Scottish first minister John Swinney has already urged the UK government to cover national insurance increases for Scottish charities, GPs, social care providers and universities.
He said the tax increase announced in the autumn budget had caused “alarm across the country”.
VAS added that it is looking forward to seeing “how our key responses throughout the third sector can help to alter this course of action”.
Reeves previously described the rise in employers’ national insurance contributions as “difficult” but said it was part of a plan to fund public services.
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