The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Caledonian Exchange, 19A Canning Street, Edinburgh EH3 8EG.
Employer National Insurance Changes
Find out what changes to National Insurance introduced in the Autumn 2024 budget mean for you
The Autumn 2024 Budget introduced changes to the level of Employers’ National Insurance Contributions.
We estimate that this will cost the voluntary sector in Scotland as a whole around £75m. Given the challenging financial context, any increase in costs will be hard for voluntary organisations to meet.
What are the changes?
From the 1st of April 2025:
- Employers will now start to pay NICs on any employee's earnings over £5,000 instead of the current £9,100 threshold
- The rate of National Insurance will increase from 13.8 to 15%
- There has however also been an increase in the Employment Allowance that employers can claim, rising from up to £5,000 to up to £10,500.
Will my organisation have to pay more tax?
The impact on your organisation will depend on how many staff you have and how much they are paid. Assuming you have employees earning average sector salaries:
- Most organisations with between 1 and 5 paid staff will likely end up paying the same or less national insurance contributions.
- Most organisations with between 6 and 10 paid staff will likely see their total payroll costs increase by around 1-2%.
- Organisations with more than 10 paid staff will likely see their total payroll costs increase by 2-4%.
There will be a disproportionate impact on sector employers with a large part-time workforce on lower wages - such as often seen in parts of the sector such as social care, childcare, leisure and retail.
SCVO lobbying
Ahead of these changes coming into force, SCVO lobbied MPs, Lords and the Scottish Government, seeking a commitment from both the UK and Scottish Governments to mitigate the impact of the increased costs for voluntary sector employers. We:
- Worked with our sister organisations in England, Wales and Norther Ireland to lobby the Chancellor ahead of the budget to make her aware of these issues
- Continued to lobby the Chancellor and Scottish MPs on behalf of impacted Scottish voluntary organisations
- Wrote to the First Minister to highlight the risk to voluntary organisations in Scotland
- Worked with the Scottish Government and COSLA to gain commitment that any additional public sector funding for mitigation is passed on to voluntary organisations in grants and contracts.
We are still working to raise awareness of the impact of the rise in Employer National Insurance Contributions on voluntary organisations. We are currently gathering information through the Third Sector Tracker on the impact of the increase, and will share this with decision makers.
Real examples of the impact
Ahead of the changes, lots of organisations shared information on the increased costs they’ll expected to face:
Four Square (Scotland)
Four Square (Scotland) is a local Edinburgh charity supporting people who face homelessness. They employ around 120 people and their turnover is less than £4m. They deliver public services on behalf of the local authority.
Four Square estimate that the increase in employers NI will mean £67k additional costs to them. They have very limited options for finding the money for those unexpected costs, and are considering whether they can afford a cost of living salary increase for staff in April 2025; or whether they need to cut posts.
Scottish Society for Prevention of Cruelty to Animals
The Scottish SPCA, Scotland’s oldest and largest animal welfare charity, estimates that the sudden cost they will face will be £400,000 per year. The 185-year old charity rescues, rehabilitates and rehomes domestic and farmed animals across Scotland, rehabilitates and releases wild animals, works in communities providing pet food and veterinary support to those in need plus a wealth of advice and guidance. It is funded entirely by voluntary donations with no Government funding.
It responded to an average of 209 reports of an animal in need every single day last year, and has seen demand for its services steadily increase. The charity recently launched an urgent fundraising appeal after the largest single influx of dogs in their 185 year history, rescued from squalor, neglect and abuse across Scotland.
To put the additional National Insurance cost into context, £400,000 is almost double the cost of feeding all the animals in their care across Scotland for a year. It’s the cost of running one of their mid-sized Animal Rescue and Rehoming Centres, for almost a year. It’s the cost of running their Animal Helpline, for more than half the year. It’s the cost of operating their nationwide frontline animal rescue team for three months of the year.
Please get in touch with kirsten.hogg@scvo.scot if you’re able to share the implications for your organisation.
Need help with employing people?
SCVO provides a range of support for employers, including our:
- Free human resources support
- Our more in-depth HR Service
- Training courses and free webinars
- Our Payroll service
- Goodmoves job search
Find out about the many services available on our supporting employers page.
Related news
Read more
Get involved
Collaborate with us and our members to develop and promote voluntary sector policy perspectives for Scotland