A Suffolk-based charity is bracing for a significant financial blow as changes to National Insurance (NI) bill take effect next month. Reach Community Projects, a vital support service in Haverhill expects to pay an additional £12,000 on top of its current contributions, bringing its total bill to £18,000.
The increase comes on the heels of Chancellor Rachel Reeves‘ announcement in the autumn Budget, which raised the NI rate employers pay to help subsidize public services like the NHS. The decision has raised eyebrows from charities who, for the most part, were wishing for the increase not to apply to them.
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Katie Chappell, Head of Fundraising at Reach, told us that her first impression of the announcement was that the organization, and many others, would have to rethink their full strategy and approach because this was a major shock.
“Charities are all in the same boat, every single one is running around trying to raise money. We appreciate every single penny sent our way, but this increase is going to be tough on us.”
Reach Community Projects is more than just a food bank. They offer a range of services including financial literacy lessons in schools, aid for those experiencing homelessness, and even cooking classes where people are taught how to make healthy and cheap meals.
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These services have become vital as more and more people are struggling economically.
Chappell also fears that the additional taxes may slow down the expansion of programs and even reduce some of them that are currently being offered.
“We are already seeing more people in need, and now we have to figure out how to cover this extra cost. There are a lot of people out there who would be finding life incredibly tough without our help,” she added.
Wider impact of the National Insurance bill
In the first point of tax change, the employer’s National Insurance Contributions have gone up to 15% from 14.2%, which is an increase of 1.2%. Additionally, the lower limit for payments has been reduced from £9,100 to £5,000. As a result, smaller charities and businesses would also have to pay more, which is despite the increase in the employment allowance of funding which is £10,500 a year.
Nonetheless, local representatives have expressed concerns that the relief might not go far enough to negate the financial burden. Joe Mason, the Conservative county councilor for Haverhill, expressed his concerns that the move might hurt services that are crucial to the community.
He also added to that by mentioning that local businesses are already going through a rough patch, and these businesses are not going to be able to take on these added expenses.
The Treasury has still not replied to the concerns that were brought up by charities or businesses concerning the change. Reach Community Projects alongside other non-profit organizations now has to seek other sources of funding so they can continue their program and help those in need.