Wbg said third sector must begin planning for the increased charges. 

A leading accountancy firm has warned the UK Government their decision to hike national insurance (NI) contributions for employers will be “burdensome” to charities. 

Wbg has said that Rachel Reeves’ decision to raise NI contributions for employers will have a knock on effect for the third sector. 

The changes will see NI increased to a rate of 15% on salaries above £5,000 from April, up from 13.8% on salaries above £9,100.

Rory McCall, director, audit, at Wbg, cited the Scottish Council for Voluntary Organisations (SCVO) who warned the move could cost Scottish charities £75million, putting further strain on finances.

He told Scottish Business News: “These new rules are likely to be particularly burdensome to charities, many of whom have been facing significant real terms funding cuts in recent years and are already struggling to generate sufficient income from fundraising to avoid recurring deficits.

“This situation has only been exacerbated in recent years following the Covid-19 pandemic.”

“It could potentially lead to many charities having to find further ways to cut costs to balance their books, which may extend to service or staffing cutbacks and reductions in pay awards.

“The Scottish Government has now joined growing calls from charities and public sector organisations to provide financial assistance to cover the increased NI costs they’re likely to face, with First Minister John Swinney suggesting recently that the UK Government should provide additional funding to cover these in their entirety.”

McCall and Wbg advised charities to plan for the increasing rates. 

He added: “Financial planning, budgeting and forecasting remains a critical tool for ensuring financial stability, and these should be revisited to ensure all potential cost increases are factored in and are carefully considered by management and trustees on a regular, ongoing basis.”