The planned rise in National Insurance Contributions (NICs) to 15% in April 2025 poses a financial challenge for UK charities.
This change will increase payroll expenses, impacting budgets and possibly affecting services. To handle this effectively, charities should embrace proactive strategies and careful preparation. Here are some suggested steps to help you get ready for the NIC rise.
Financial forecasting
It’s vital to forecast finances accurately to understand how the NIC increase will impact budgets. Charities should update their financial models, recalculating payroll costs and adjusting budgets. This helps pinpoint potential shortfalls and where savings can be made. Regularly updating forecasts ensures informed decision-making.
Reviewing staffing levels
Evaluating current staffing and exploring efficiency options can help manage payroll costs. Consider flexible working arrangements, increasing volunteer roles, and job sharing to maintain service delivery while managing costs.
Optimising employment allowance
The Employment Allowance will rise to £10,500, helping offset NICs for eligible employers. Charities should maximize this allowance by reviewing eligibility and making necessary adjustments to benefit fully.
Implementing cost-saving measures
Finding and applying cost-saving measures can help balance NIC increases. Look into renegotiating supplier contracts, reducing non-essential expenses, and improving operational efficiency to control costs.
Enhancing fundraising efforts
Boosting fundraising and diversifying income streams can provide financial support. Explore new campaigns, grants, and partnerships to increase revenue. Engage donors with innovative online campaigns and virtual events to attract support.
Engaging with stakeholders
Communicate with donors and stakeholders about the NIC increase challenges. Transparency can help gain support. Emphasise continued donations and seek additional funding from sponsors and grant bodies.
Seeking professional advice
Accountants and financial advisors can offer valuable strategies for financial management. Their expertise helps navigate complex financial situations and ensures preparedness for changes. Speak to your accountant or one of our specialist charities team here at Hillier Hopkins. Find out more about our services for charities.
Long-term strategic planning
Developing a strategic plan with financial resilience measures is key. Build reserves, diversify income sources, and conduct regular financial reviews to prepare for future challenges.
How we can help
Though the rise in National Insurance Contributions challenges UK charities, proactive planning and strategic measures can manage the impact. We can support you in finding ways to mitigate these challenges and offer expertise and guidance to help you to continue delivering essential services to the community. If you would like help we offer free initial consultations, to book yours contact us today on +44 (0)330 024 3200 or hi@hhllp.co.uk.
