Accomplished Charity Accountants at James Todd & Co Comment on Calls for New Exemptions and Allowances

Ahead of the Spring Statement, due at the end of this month, James Todd & Co, an experienced and long-established team of charity accountants with a specialism in the sector, has reviewed the impacts of anticipated rises in employment costs and the calls for immediate action.

In the next tax year, charities and not-for-profit organisations face a sharp rise in annual taxation, specifically related to the increase in National Insurance Contributions (NICs), at a cost of £1.4 billion, with many leaders making strident appeals for exemptions to be agreed upon.

The Impetus Behind Growing Calls for Charitable Exemptions from UK Tax Rises

Last month, the House of Lords voted for a proposal that called for exemptions, at least for smaller charities. This would exempt them from the increases to employer NICs due to take effect in April – with a tabled amendment that proposed that those with annual revenues of under £1 million will be included in the exemption.

While this proposal is subject to a third House of Lords reading, this may not be reflected in immediate changes, given that the government has refused to even consider concessions or any amendments to the announced tax rises.

MPs' previous proposals to advocate for charitable exemptions have also failed. Government spokespeople have stated that the employment allowance will mitigate the impact of other tax rises—something that authorities in the sector are referring to as a drop in the ocean.

Some separate initiatives have been announced in the meantime, including the Energy Redress Scheme, which is inviting charities who support low-income families and those in energy poverty to apply for grant funding – with grants of up to £2 million. While this has been welcomed, it is seen as a small, specifically targeted scheme and one that will do little to support the charitable sector in the face of vast increases to their running costs.

James Todd & Co, a highly regarded expert in charity accounting, has noted the apprehension and fear this environment has created, with charities considering how they can continue to deliver vital community and welfare support for vulnerable people while remaining financially viable.

Reflecting on the Real-World Impacts of Tax Rises on British Charities and Non-Profit Organisations

Oliver Read FCCA ACA, Director at James Todd & Co says, ‘We recognise that, since the reforms to NIC contributions were announced in the Autumn Budget, there has been a huge amount of concern and worry about how this will affect the economy as a whole—but particularly in sectors where the knock-on effects of higher tax burdens are considered potentially disastrous.

The charity sector has drawn a spotlight because non-profit organisations largely benefit from goodwill, donations, and corporate sponsorship.

All of this is forecast to drop substantially when business partners have little flexibility in their own budgets. Philanthropic causes are likely to take a back seat while overheads are continuing to rise, compounding the challenges of fundraising during a cost-of-living crisis.

This has generated a two-tiered risk, where higher operating costs and a drop in financial assistance may mean some charities, especially smaller and community-based schemes, may not be able to fulfil their objectives safely and sustainably.

Many of our clients have been disappointed to see a series of proposals rejected in the House of Commons, none of which have gained majority support. However, this latest outcome from the House of Lords is positive.

It reflects that these very serious issues have been noticed, recognised, and perceived as 'misguided' attempts to raise taxation through the charitable sector.

In the meantime, we urge any charities worried about their budgets, financial liquidity, or workforce stability to contact us at any of our offices in Chichester, Fareham, or Southsea to seek independent advice about the best way to manage additional tax pressures going forward.'

The Third Sector Response to Expected NIC Increases From April 2025

The accountancy experts are not the only leading voices raising awareness of the pending challenge.

Organisations like the Association of Chief Executives of Voluntary Organisations (ACEVO) are working to improve awareness of how NIC increases will impact communities and causes and engage in dialogues with parliamentarians to ensure they grasp the seriousness of the issue.

Charities of all sizes are encouraged to take proactive action in light of the uncertainty about whether exemptions will be forthcoming and seek accountancy and financial planning assistance to look for efficiency savings, funding gaps, or cash flow shortfalls and ensure they are aware of all potential options and strategies.

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About James Todd & Co

James Todd & Co have been providing accounting services for more than 30 years across Chichester, Fareham, and Portsmouth for businesses across the South East. Their clients trust them to provide bookkeeping, financial auditing and compliance, management accounting and financial advisory services.

Media Contact:

Oliver Read
James Todd & Co
01243 776938
www.jamestoddandco.co.uk