Rachel Reeves has been likened to “Ebenezer Scrooge” from Charles Dickens’ A Christmas Carol as it emerged her Budget tax grab will mean nearly half of every pound donated to charity will effectively go to the Government.
The Chancellor’s National Insurance changes mean that 45 pence in every pound given to charitable causes will be handed over to HM Revenue and Customs (HMRC) next year.
This revelation has sparked outrage among charity leaders and politicians, who warn the tax raid threatens vital services across the voluntary sector amid the ongoing cost of living crisis.
Sarah Elliott, head of the National Council for Voluntary Organisations, warned that many charities are now facing “devastating decisions” between managing overstretched budgets and providing essential services.
The tax changes are set to take effect from April 2025, with charity bosses warning staff layoffs and cutting crucial support programmes are being considered to mitigate the cost.
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Reeves has been compared to Scrooge due to her National Insurance hike
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Under the National Insurance raid, an extra £1.4billion will be added wage bills across the voluntary sector, according to exclusive analysis reported by The Mail on Sunday.
The total amount charities will hand over to HMRC in National Insurance payments next year will reach £6.3billion. This represents a significant increase from the current £4.9billion payment level, which amounts to 35 per cent of public donations.
Figures from the Charities Aid Foundation UK show the public donates £13.9billion annually to charitable causes. While charities can receive additional funding through government grants and service contracts, smaller organisations typically depend more heavily on public donations.
The National Council for Voluntary Organisations, representing 17,000 groups, has calculated that the sector’s National Insurance burden will rise by £1.4billion when the Chancellor’s policy takes effect.
Business owners and charities are worried about the looming National Insurance raid
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Shadow Paymaster General Richard Holden has branded the Chancellor “a modern-day Grinch” – comparing her to the Dr Seuss character who steals Christmas gifts from an entire town.
“With her new National Insurance jobs tax snatching cash donated to those in need, she is dipping her hands deep in every charity collecting tin,” Mr Holden said. “When you see a Labour MP, ask them why they think it’s fair the taxman will be taking almost half of your donation at Christmas.”
Conservative, Liberal Democrat and Reform MPs attempted to push through an amendment to spare the voluntary sector from the tax changes last week. However, the amendment was voted down by Labour MPs, intensifying criticism of the Chancellor’s approach to charity taxation.
Shadow Culture Minister Stuart Anderson called the tax rise a “slap in the face” for those feeling generous this Christmas season. Matthew Reed, chief executive of Marie Curie, revealed the end-of-life charity faces an additional £3million tax burden next year.
He noted that while volunteers collecting donations were “met with warmth and kindness from the public,” he was “confident that not a single one of these generous donors would want their donations passed straight through to HMRC.”
The RSPCA has expressed serious concerns animal welfare, with the charity stating the National Insurance rises could cost them more than £1million in the next year alone. Craig Jones, chief executive of the Royal Osteoporosis Society, urged the public to continue supporting charities despite the tax increase.
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“I hope people don’t feel discouraged from giving to charities, because the National Insurance rise is one of the reasons charities need donations more than ever,” he said.
Former Tory Cabinet Minister and GB News host Sir Jacob Rees-Mogg drew parallels with the fiction of Dickens, suggesting Reeves was “modelling herself on Ebenezer Scrooge before he’s had his dreams.”
“By imposing these unnecessary tax rises on charities, this granite-hearted Chancellor is not just failing to come to Tiny Tim’s aid – she’s kicking the poor little mite’s crutch away,” he added. Labour MP Graham Stringer called on the Chancellor to “show some festive spirit and give charities some much-needed relief.”
A Treasury spokesman defended the Government’s position, stating: “Our tax regime for charities, including exemption from paying business rates, is among the most generous in the world.”
