Articles

Today (March 26, 2025) brought the government’s annual Spring Statement. Chancellor Rachel Reeves introduced several fiscal measures aimed at addressing economic challenges we face in the UK today. While these policies target overall national economic growth, they carry significant implications for the charity sector – and could come with some short-term struggles.

Key Measures Affecting Charities

Welfare Benefit Reductions

This announcement has been in the works for several weeks. An announcement by the government recently had those in receipt of some disability benefits wondering how they would manage after these cuts. The official Spring Statement announced cuts to welfare benefits, including a halving of the health top-up for new Universal Credit claimants starting next year and a freeze at £50 per week until 2030. These changes are projected to save £4.8 billion, but it is argued they could spark an increase in relative poverty levels.

Implication for Charities

An uptick in poverty levels may lead to increased demand for charitable services, particularly those assisting low-income individuals and families.​

Employer National Insurance Contributions (NICs) Increase

An earlier budget outlined an increase in employer NICs from 13.8% to 15% starting April 2025. Despite appeals from over 7,300 charities for exemptions or reimbursements, the Chancellor has upheld this decision, potentially adding an estimated £1.4 billion annual tax burden on charities.

Implication for Charities

This increase may strain financial resources, necessitating budget adjustments or program cuts.​

Affordable Housing Investment

The government committed an additional £2 billion to the Affordable Homes Programme, aiming to add 18,000 affordable homes by 2029.

Implication for Charities

Organisations focused on housing and homelessness may find opportunities to collaborate with the government on these initiatives.​

The 2025 Spring Statement presents both challenges and opportunities for UK charities. While increased financial pressures are evident, strategic planning and proactive engagement with new government initiatives can help charities navigate this evolving landscape.

Aedon.Accounting has your back. We have specialist charity accounting software which makes your accounting much easier – especially in these uncertain economic times.

Give us a call today, or book a demo, to see how we can ease the burden on charities while they sail the choppy waters of their finances. With Aedon.Charities, we can make it smooth sailing.