At WRS Insurance Brokers, we understand the financial pressures that charitable organisations just like yours face and with the Spring 2025 Budget on the horizon, many charities are concerned about potential cuts to welfare benefits, increased National Insurance costs, and changes to tax reliefs.

In this blog, our Charity Insurance team explores the potential budget announcements and how they could impact charities across the UK.

Welfare Reforms

The government has signalled intentions to implement substantial cuts to disability benefits, including the Personal Independence Payment (PIP), to encourage employment among recipients and reallocate funds to other priorities. 

However, these proposed cuts have sparked considerable concern among charities, particularly those supporting disabled individuals. Organisations fear that reducing disability benefits could push vulnerable households into poverty without effectively increasing employment rates. More than a dozen charities have collectively urged the Chancellor to safeguard these benefits in the upcoming budget, emphasising the potential adverse effects on the communities they serve.

Increase in Employer National Insurance Contributions

Another anticipated measure is the increase in Employer National Insurance Contributions (NICs) from 13.8% to 15%, effective from April 6, 2025. While this policy aims to bolster public funds, it poses significant challenges for the charity sector, which often operates under tight financial constraints. The rise in NICs is expected to elevate payroll costs for charities, potentially amounting to an additional £1.4 billion for the sector as a whole.

This increase could force charities to make difficult decisions, such as reducing staff numbers, scaling back services, or reallocating funds from other areas to cover the heightened expenses. For instance, the Alexander Devine Children’s Hospice in Maidenhead anticipates significant financial strain due to the NICs hike, prompting fundraising efforts to mitigate the impact.

Take a look at our guide to successful fundraising here.

Changes to Tax Reliefs and Funding Allocations

The budget is also expected to introduce changes affecting tax reliefs and funding allocations:

• Charity Tax Reliefs: From April 2023, charity tax reliefs have been restricted to UK-based charities. This change means that charities must be registered in the UK to benefit from tax reliefs, potentially affecting organisations with international affiliations.

• Official Development Assistance (ODA) Funding: Despite lobbying from international development charities, there has been no announced increase in ODA funding. In real terms, the aid budget is expected to decrease by £2 billion to £13.3 billion in 2024-25 before a slight rise to £13.7 billion in 2025-26. This reduction could hinder charities engaged in overseas development and humanitarian work.

Preparing for Financial Challenges

In light of these anticipated measures, charities should proactively assess their financial strategies to navigate the forthcoming challenges:

• Financial Planning: Reevaluate budgets to account for increased NICs and potential reductions in funding. This may involve identifying cost-saving measures or diversifying income streams.

• Operational Efficiency: Explore opportunities to enhance operational efficiency, such as adopting digital tools, streamlining processes, or forming partnerships to share resources.

While the Spring 2025 Budget presents challenges, it also offers an opportunity for charities to adapt and innovate. By staying informed and proactive, the sector can continue to fulfil its vital role in supporting communities across the UK.

This article is for informational purposes only and should not be considered legal advice.

About WRS

At WRS Insurance Brokers, we are specialists in Charity Insurance and Social Enterprise Insurance and our team is passionate about the charitable sector. As a business with a strong social conscience, we’re passionate about helping support the work of organisations that make a difference. 

WRS is proudly part of the Benefact Group, a charity-owned, international family of financial services companies that gives all available profits to charity and good causes.