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.
What’s being done to mitigate the impact?
The UK Government has stated its commitment for the increased funding to enable public sector employers to meet these additional costs. However, there is no such commitment to the voluntary sector, despite being a significant provide of essential public services.
We want to see a commitment from both the UK and Scottish Governments to mitigate the impact of the increased costs for voluntary sector employers. Here's what we're doing:
- Working 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
- Continuing to lobby the Chancellor and Scottish MPs on behalf of impacted Scottish voluntary organisations
- Writing to the First Minister to highlight the risk to voluntary organisations in Scotland
- Working 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.
Real examples of the impact
We’ve had lots of organisations already share information on the increased costs they’ll face next year:
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.
What can my organisation do?
The impact of changes to employer National Insurance Contributions (NICs) on medium and large voluntary organisations is creating a lot of discussion in the media and among politicians. You can contribute by adding your organisation’s story to the debate, and amplifying SCVO’s calls of government.
If your organisations provides public services, you could write to your local MSP, telling them how much your costs have increased and sharing the story of how the increases impact your organisation and the services you provide.
If your organisation doesn’t provide public services, you may still wish to write to your local MSPs about how the increases impact your organisation, reminding them that not only public service providers are affected.
SCVO have called on the Scottish Government to ensure that grants and contracts awarded by the Scottish Government, its agencies, and other public bodies, are uplifted to meet the costs associated with changes to NICs, as well as inflationary pressures.
You can write to your local MPs, estimating the financial impact on your organisation and explaining how the changes impact you and the essential services and support their constituents rely on.
If you are writing to your MP, please also amplify SCVO’s calls on the Chancellor to offer the sector parity with public sector employers who will be reimbursed for additional employer NICs costs.
You can use social media to call on your MP to recognise the sector as an employer, recognise the need for parity between public services provided by the public sector and the voluntary sector, and to support the voluntary sector and SCVO’s calls.
You can write to or share press releases with local media on the impact of increases to employer NICs on your organisation and the sector more broadly. Share SCVO’s calls.
Share SCVO’s work on this issue on social media. Here are some examples that could be shared.
- @SCVOtweet joint letter: https://x.com/scvotweet/status/1850879195435475180
- #SCVOPolicy blog on the #AutumnBudget:
- https://x.com/scvotweet/status/1854494351352590676
The blog also features on Linkedin. - @NCVO Open letter: https://x.com/NCVO/status/1854931890727534740
- @ThirdForceNews piece.
https://x.com/ThirdForceNews/status/1854459792196034701 - Third Force News piece on the FMs reaction to NICs impacts on the voluntary sector.
What have the UK Government said?
The UK Government have said that the Scottish Government will receive additional funding on top of the £3.4 billion of Barnett consequentials announced in Budget to support them with the costs associated with changes to employer national insurance contributions. So far this support is for the public sector.
The Scottish Fiscal Commission has said the Scottish Government has received £339 million through the Block Grant and that this is between 47% and 63% of the cost to the devolved public sector workforce depending on definition.
What have the Scottish Government said?
The First Minister has recognised the Chancellor’s intention to increase employers’ National Insurance Contributions will have a significant impact on the voluntary sector in Scotland and has called for support for the sector.
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.
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