Jewish charities have sounded the alarm following the hike in employer National Insurance Contributions (NICs) announced in the autumn Budget, with some warning that they would have to scale back services and cut staff.
It comes after Chancellor Rachel Reeves revealed on Wednesday that the rate employers pay in NICs would increase from 13.8 per cent to 15 per cent on a worker's earnings above £175 from 1 April 2025, with no exemptions for the third sector.
The United Synagogue, the Jewish Leadership Council (JLC), the Board of Deputies of British Jews and several Jewish charities have joined wider calls for the government to urgently reconsider the proposal, which, if implemented, would have “devastating” consequences on an already over-stretched and under-funded sector.
The National Council for Voluntary Organisations (NCVO) and the Association of Chief Executives of Voluntary Organisations (ACEVO) have sent an open letter to the chancellor, outlining the “dire” financial situation of charities and how increased NICs would only push more of them under.
The sector’s total increased costs following a rise in NICs would be £1.4 billion per year, according to the NCVO and the ACEVO.
To cover this bill, the “harsh reality is that many organisations may be forced to reduce staff, cut salaries, and most importantly, scale back services for the very people they strive to support”, the letter said.
The chancellor also announced that the threshold at which employers start paying national insurance on each employee’s salary will be reduced, from £9,100 per year to £5,000, adding to the burden.
Reeves said that the rise in employers’ NICs will raise £25 billion per year — covering more than half of the £40 billion overall tax rise announced in the Budget — to fund essential public services.
The NHS and the rest of the public sector is exempt from the tax rise, but private care homes and hospices which provide NHS services are not, and nor are charities.
Charities are not only facing increased NICs. They will also have to cover the rise in the National Living Wage, increasing by 6.7 per cent, and the rise in the Minimum Wage, from £8.60 to £10.
“If the government doesn’t reverse its decision, it is vulnerable people across the country who will inevitably pay the price,” said Michael Goldstein, the president of the United Synagogue.
Goldstein has joined the urgent call from across the entire third sector, urging the government to make charities exempt from proposed rise in NICs.
The United Synagogue has said that the increase in National Insurance would add £500,000 to their annual tax bill, which could threaten the provision of their charitable services. One of their provisions is a food hub for vulnerable congregants (Photo: Leivi Saltman)
He said the United Synagogue employed more than 800 people across its communities, nurseries, cemeteries, kashrut and support departments and was now facing an additional tax bill of £500,000 following the Budget.
If the government didn’t reconsider its stance, it would have to reduce its charitable services, or drastically increase what the charity raised per year, said Goldstein.
“It is incredibly unfair - and self-defeating - that the government, while seeking to bring more tax revenue to the Treasury from businesses, is treating charities in the same way as profit-making companies,” he said.
He added that charities across the UK would be desperately looking at their budgets and working out how they would be able to continue all their services while absorbing additional costs. “The sad conclusion for many is likely to be that they can’t,” he said.
The Jewish Leadership Council (JLC) has also joined the charity sector’s collective demand on the government to make charitable organisations exempt from the proposal. “These increased costs on charities are unfortunately likely to have a damaging impact on their work,” it said on X/Twitter.
The Budget did herald some positive news for the third sector however. Reeves announced a £600 million grant for social care, £1 billion to support children with special educational needs and disabilities (SEND), and an extra £2 million towards Holocaust education.
But voluntary organisations across the sector, including Jewish charities such as Jewish Blind & Disabled, Jewish Care and Norwood, have all expressed concerns about how they’ would continue providing essential services following the Budget.
Norwood, the UK's oldest Jewish charity supporting children, families and people with learning disabilities and autism, said it was pleased with some aspects of the Budget, such as the £600 million investment into social care, but that it was now facing an additional £1 million staffing bill.
“With public funding under so much pressure, organisations like Norwood and its partners in the community and wider sector are having to step in to support vulnerable children and families,” the charity said, referencing clients who struggle to have their needs scoped when faced with an extremely long wait for a diagnosis.
“The budget announcements risk further tying our hands in already trying circumstances, presenting us with an additional £1m staffing bill we are forced to balance, whilst pursuing a dynamic growth agenda designed to fill the gaps in local authority provision and government funding for families struggling to cope with neurodiversity and neurodevelopmental disability.”
As it stands, Norwood looks to raise £12 million from its community each year to meet the cost of its existing service provision.
Purim celebrations at Norwood, which has said that the increase in National Insurance would add £1 million to its annual staffing bill (Photo: Jonathan Abrahams)
Lisa Wimborne is the chief executive of Jewish Blind and Disabled, which provides housing and support for Jewish adults with physical disabilities and visual impairments. She said her charity was already feeling the impact of rising inflation and a huge increase in demand for services, but now the Budget had added new costs.
“Although there were announcements about additional funding in housing and social care, I don’t expect we will see any of these,” she said. “So, we are left with an additional £36,000 bill every year for National Insurance. This is just one of many new costs we are facing.”
Ruth (centre), who lives in a JBD apartment, with (l-r) TV personality and JC columnist Rob Rinder, JBD CEO Lisa Wimborne and JBD chair Marc Gordon at the charity's annual dinner. Wimborne said that the additional national insurance would add to the charity's already spiralling costs (Photo: Blake Ezra Photography)
Daniel Carmel-Brown, the CEO of Jewish Care, the leading health and social care charity for the Jewish community in London and the South-East, said the rise in NICs would be “damaging for us” as well as the wider sector.
He said it would add “hundreds of thousands of pounds to the cost of employing their 1,300 caring staff, with no balance elsewhere in the budget”.
If an exemption wasn’t made, the charity would be forced to raise the fees for self-funders and to push local authorities “to increase their already limited contributions to people’s care costs”, he said.
“Every government for the past 30 years has promised and failed to deliver on committing to support the future of social care, and we continue to wait for a plan on this,” said Carmel-Brown.
“At the same time, Jewish Care continues to see an increase in the need for the provision of care for older people, including those living with dementia, or who are at the end of life, and a rise in those living with mental illness, distress or trauma,” he said, who rely on the Jewish Association for Mental Illness’s (Jami) services, which now come under Jewish Care.
“We urgently need to see cross-party political agreement on the social care crisis and to find a way forward to address this.”
Some charities will be protected from the hike through the Employers’ Allowance, which Reeves announced she would extend from £5,000 to £10,500, allowing eligible employers to reduce their NI liability. Moreover, the £10,000 threshold for claiming the allowance will be removed, making the money more available to a wider range of charities.
Even with these protections, the average employer will face an added £26,000 in annual costs (about £800 per employee) due to the increase in NICs, according to the Office for Budget Responsibility (OBR).
It also said that 60 per cent of the higher costs would be passed onto workers and consumers, via lower wages and higher prices in 2025 to 2026.
In a letter to the chancellor, Phil Rosenberg, president of the Board of Deputies, expressed concern for charities in the Jewish community and across the UK.
“I know that the difficult environment that our country is in has doubtless necessitated some tough financial decisions,” he said. “I would suggest, however, that everything possible be done not to jeopardise an already somewhat precarious position for non-profit organisations doing their best to help so many in society.”
AN HM Treasury spokesperson said:“Our tax regime for charities, including exemption from paying business rates, is among the most generous of anywhere in the world, with tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024.
“Increasing employer National Insurance will raise over £25 billion to help fund the NHS and protect working people’s payslips from higher taxes.”
They added that charities would still be able to claim employer NICs reliefs, including those for under 21s and under 25 apprentices,
