March Policy Update

We’ve made it to Spring, and we’re starting to see more of the new government and their priorities for the country. In this month’s policy update, we take a closer look at the Spring Statement, the new Charities SORP consultation and the increase in Employer NICs.  

Charities react to the Chancellor’s Spring Statement  

Rachel Reeves delivered her first Spring Statement on 26 March, confirming major cuts to welfare and international aid, and a £2.2 billion increase to the Ministry of Defence budget for 2025/26. She argued that the welfare changes would save £4.8 billion up to 2029/30. Details include:   

• Health-related universal credit for new claimants is due to be cut from £97 to £50 per week from April 2026 and will not rise with inflation until after 2030
• Under-22s will no longer be able to claim the health-related element of universal credit 
• There will be a stricter eligibility test for personal independence payments (PIPs) from November 2026, and it’s estimated that this change will mean 800,000 people lose this source of financial support
• Overseas aid will be reduced to 0.3% of Gross National Income (GNI) to fund the rise in defence spending. 

Many charities working on poverty and disability have been left reeling, and are concerned about the impact on the people they serve. The Joseph Rowntree Foundation described them as an ‘assault’ on the poorest, and Mind said the cuts were stripping away ‘the last line of support for some of the most vulnerable people in our society.’  

In our latest article, Jay Kennedy, DSC’s Director of Policy and Research, analyses the Chancellor’s statement and asks whether this is another example of government opting to patch up problems rather than address root causes. His piece also includes links to other analyses on the impact of the welfare and aid cuts. Take a look here.

MPs reject Peers’ amendments to soften the impact of the ENICs rise 

At the Autumn Budget last year, the Chancellor confirmed that Employer National Insurance Contributions (ENICs) would increase this April from 13.8% to 15%. Although smaller charities will be unlikely to be affected, these changes are projected to cost the sector £1.4bn overall. 

A series of amendments to the Bill that brings effect to the changes were tabled in the House of Lords, which many charities had pushed for. These included exempting charities with an income under £1 million from the changes, and requiring the government to carry out an impact assessment on how the ENICs increase would affect charities. 

All of the amendments were rejected by the government, which is disappointing news. More than half of charities anticipate negatives impacts from changes in ENICs, putting charity services at risk. Sarah Elliott, the Chief Executive of the National Council for Voluntary Organisations, said the ENICs rises were the “biggest shock to charities’ existence since the pandemic”, and would have “massive consequences” for their users. Back in November, NCVO and ACEVO wrote to the Chancellor urging her to reconsider, and although Reeves did respond, she asserted that it is a necessary decision to cope with the economic instability they inherited. 

If you’re worried about the impact of these changes on your charity but not sure how they affect you, check out our article by Ross Palmer, Senior Tax Manager at Sayer Vincent, where he goes into detail about how they will affect charities with different staffing and incomes. Take a look here. 

Have your say on the Charities SORP 

The SORP, or Statement of Recommended Practice, translates international accounting rules into a framework for charity accounting and financial reporting in the UK. It is what governs how charity accounts and trustee reports are prepared and what information goes into them, so it’s quite important for charity transparency. 

The ‘joint SORP-making body’ has launched a public consultation on the next version, including an ‘exposure draft’, which will run until June. It has been quite a few years since the SORP was last updated, so this consultation is really important. It is expected to be finalised in the Autumn and in force from 2026. 

The new version has been updated to align with changes made by the Financial Reporting Council (FRC) to FRS 102. These updates specifically affect how charities recognise certain types of income and leases in their financial statements. Additionally, the SORP-making body has proposed simplifying the framework to make it easier for charities to use, while also improving transparency for beneficiaries, donors, and the public about how charity resources are managed. 

These proposed changes include:  

• Introduction of three tiers based on income levels to ensure proportionate reporting, while also meeting the information needs of users
• Advancing reporting in important areas such as impact reporting, reserves, going concern and volunteers
• Introduction of proportionate reporting for environmental, social and governance issues. 

Charities are being encouraged to share their views on the draft changes by Friday 20 June. Fill in the consultation here. 

Unsure about how these new changes to Charities SORP will impact your small charity? Find out more in our article by Elaine Alsop, Charity Finance Consultant. Check it out here. 

DSC will be planning more on the SORP over the coming months, so stay tuned to our email bulletin and www.dsc.org.uk.