Impact Of Employer National Insurance Contributions Increase On The Voluntary And Community Sector

26th November 2024

UK Chancellor Rachel Reeves announced in the Autumn Statement on 30 October 2024 that Employer National Insurance Contributions (NICs) will increase, affecting costs for organisations in the Voluntary and Community Sector.

Unlike public sector organisations including across health and social care and local Councils where these budget changes will have to be reimbursed, Voluntary and Community sector organisations will have to absorb the budget impact of the changes.

Key Changes Affecting the Voluntary and Community Sector
Below, we set out some key things employers in our sector need to know:

Changes to Employer NICs will come into effect from April 2025.

The rate of Employer NICs will increase from 13.8% to 15%.

Employers will start to pay Employer NICs on salaries from £5,000 (reduced from £9,100).

The legal minimum wage for over-21s will rise from £11.44 to £12.21 per hour.

The employment allowance - an HMRC scheme which allows smaller organisations to reduce their Employer NIC liability, will increase from £5,000 to £10,500 per annum.

The eligibility threshold for employers to benefit from the employment allowance, previously set at £100,000 per annum will be removed. Previously, employers would only have been eligible to claim the employment allowance if their total Employer NICs were greater than £100,000. From April 2025, this will no longer be the case, meaning more organisations will be able to benefit from the employment allowance.

For VCS organisations that receive grant funding for staff through Department for Communities (DfC), from August 2024, they will be able to retain the full amount of any employment allowance received. (This was agreed through the NI Executive and is not covered by the UK-wide changes announced as part of the Autumn Statement).

Note
This is part of an article from https://www.nicva.org/

Comment
Charities and voluntary organisations who have employees will require to check carefully how the new rules affect them.
National Insurance contributions are to be increased in the private sector. Public sector employers will be reimbursed for any such increase, to protect public services. But there has been no mention of the voluntary sector. So remains to be seen if here will be any further changes for the non public sector organisations.