Rachel Reeves was dubbed the Christmas Grinch last night as it was revealed that her Budget tax grab means 45 pence in every pound donated to charity will now effectively go to the Government.
The Chancellor’s National Insurance raid will add an extra £1.4billion to wage bills in the already struggling voluntary sector, forcing bosses to decide whether to lay off staff or axe vital services.
Exclusive analysis by The Mail on Sunday shows that following Ms Reeves’ hikes, charities will hand over a total of £6.3 billion in National Insurance payments to HMRC next year – which is equivalent to 45 per cent of the £13.9 billion donated by the public.
Shadow Paymaster General Richard Holden called the Chancellor ‘a modern-day Grinch’ – the mean-spirited Dr Seuss character who steals a whole town’s Christmas gifts.
‘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,’ he added. ‘People will be forced to rethink their generosity.’
Sarah Elliott, head of the National Council for Voluntary Organisations, said: ‘Many charities rely on the generosity of the public but that can only stretch so far. People would be hugely concerned if they fully understood the perilous situation facing charities and how many are cutting services or facing closure.
‘One thing is clear – the rise in employers’ National Insurance contributions will push many charities to breaking point, forcing devastating decisions between managing overstretched budgets and providing the lifelines so many rely on.’
Rachel Reeves was dubbed the Christmas Grinch last night as it was revealed that her Budget tax grab means 45 pence in every pound donated to charity will now effectively go to the Government
Shadow Paymaster General Richard Holden called the Chancellor ‘a modern-day Grinch
Mr Holden (pictured) added: ‘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’
Her organisation, which represents 17,000 groups, calculated that the sector’s National Insurance is set to rise from £4.9 billion – or 35 per cent of public donations – to £6.3 billion when the Chancellor’s policy kicks in from April.
Matthew Reed, chief executive of Marie Curie, says the end-of-life charity faces paying an extra £3 million in tax next year.
He told how volunteers who rattled tins in high streets were ‘met with warmth and kindness from the public’ but added: ‘I am confident that not a single one of these generous donors would want their donations passed straight through to HMRC.’
Last night charity bosses issued an urgent plea to the Chancellor to reconsider, but the Treasury has so far resisted pressure to exempt charities from the tax raid.
Last week Conservative, Liberal Democrat and Reform MPs tried to push through an amendment to spare the voluntary sector, but it was voted down by Labour MPs.
Tory MP 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.’
Shadow Culture Minister Stuart Anderson added that the tax rise was a ‘slap in the face’ for members of the public feeling generous this Christmas.
And Liberal Democrat deputy leader Daisy Cooper said: ‘This will clobber charities who are providing vital services and support. The extra financial burden will put their work at risk.
The mean-spirited Dr Seuss character steals a whole town’s Christmas gifts
Exclusive analysis by The Mail on Sunday shows that following Ms Reeves’ hikes, charities will hand over a total of £6.3 billion in National Insurance payments to HMRC next year
‘For many, this may even be the last Christmas where they can do their essential work before the added pressure is too much.’
According to the latest figures, the Charities Aid Foundation UK says the public donates £13.9 billion a year. But this is not the only source of funding for charities, as they can also receive government grants or deliver public services under contract. But the smaller the charity, the more reliant they typically are on public donations.
Philanthropists and business leaders also called on Ms Reeves to change course.
Businessman Lord Spencer, who has just pledged to donate £20,000 to the Royal Osteoporosis Society, said the National Insurance tax hike was a ‘calamity’ for charities and businesses.
And advertising tycoon Sir Martin Sorrell criticised Ms Reeves’ Budget and called for an exemption for the sector.
He said: ‘Charities often act as a private subsidiary for what government does.
‘I gave to a charity I believe in recently and it wrote back to say it was under the pump because of increased National Insurance contributions. Some of these charities won’t survive by themselves.’
Craig Jones, chief executive of the Royal Osteoporosis Society, said: ‘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.
‘The whole sector is hoping and praying that the Chancellor changes her mind.’
An RSPCA spokesman said: ‘We’re really concerned at the impact these National Insurance rises – which could cost us more than £1 million next year alone –will have for animal welfare.
‘We urge the Government to help by easing this burden.’
Senior Labour MP Graham Stringer said: ‘I would appeal to the Chancellor to show some festive spirit and give charities some much-needed relief.’
And former Tory Cabinet Minister Sir Jacob Rees-Mogg said: ‘If Rachel Reeves has read Charles Dickens’s A Christmas Carol, she’s obviously got the wrong message.
‘She’s clearly modelling herself on Ebenezer Scrooge before he’s had his dreams and come to his senses.
‘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.
‘But like Scrooge, it’s not too late for Red Rachel to salvage what’s left of her reputation and give hard-pressed charities some much-needed Christmas cheer.’
A Treasury spokesman said: ‘Our tax regime for charities, including exemption from paying business rates, is among the most generous in
the world. Tax reliefs for charities and their donors were worth just over £6 billion for the tax year to April 2024.
‘We have protected small charities and businesses by more than doubling the Employment Allowance to £10,500, meaning more than half of all employers with National Insurance liabilities either gain or see no change next year.’