Howden study warns National Insurance Contributions hike is pushing UK Charities to the brink

London, 8 July 2025 – A new research report, Rewarding Industries 2025, reveals that a sharp rise in employer National Insurance Contributions (NICs) is placing unprecedented financial pressure on UK charities, with over half warning they may not survive the year.

The report, from Howden UK&I’s specialist charity and not-for-profit division is based on a survey of 314 financial decision-makers in UK charities. It highlights that the April 2025 increase in employer NICs - from 13.8% to 15%, alongside a lowered threshold - has emerged as the single biggest business challenge for the sector. This is because it imposes unaffordable costs on organisations already operating on tight budgets, with limited ability to offset the increase through price rises or fundraising.

Key findings

• NICs top the list of concerns: 31% of respondents named the NIC increase as one of their top three business challenges - more than any other issue.
• Closures looming: 51% of charities say they are at risk of closing in 2025 due to financial pressures, up from 43% in 2023.
• Fundraising can’t fill the gap: 57% report that fundraising has become more difficult, and 55% say the shift away from cash donations is hurting their efforts.
• Larger charities hit hardest: Those with higher wage bills are more likely to be cutting staff salaries and benefits to cope with the NIC burden.

The report also reveals that many charities are being forced to make difficult decisions to stay afloat. Nearly one in five (19%) are freezing or cutting staff salaries, while 21% are reducing benefits. Others are downsizing office space, switching to remote work, or seeking corporate partnerships to offset rising costs.

“This NIC hike couldn’t have come at a worse time,” said Mark Fisher, Associate Director, Not-for-profit division, Corporate & Commercial, Howden UK&I. “Charities are already stretched thin by rising costs and falling donations. Now, they’re being asked to absorb a tax increase they simply can’t afford — and unlike businesses, they can’t pass those costs on. It’s not just about numbers on a balance sheet. It’s about whether a domestic abuse survivor gets help, whether a disabled person can access transport, whether a food bank stays open. Charities are not just part of the economy — they’re part of the social fabric. We need to ensure they’re not penalised for employing people to do good.”

Optimism amidst the challenges 

Beyond the NIC increase, the whitepaper highlights several pressing challenges facing UK charities in 2025. Fundraising remains a major concern, with 57% of charities reporting increased difficulty due to the decline in cash donations and persistent cost-of-living pressures. Cyber fraud and hacking are also significant challenges for organisations and staff, as 92% have been targeted, to their knowledge, yet only 24% feel well-prepared for potential cyber threats. Talent retention is also under strain, as 71% of staff are tempted to leave for better-paid roles, driven by rising living costs and limited financial flexibility within the sector. 

Despite these hurdles, charities are showing resilience by embracing digital tools, forming corporate partnerships, and investing in staff wellbeing and flexible working to sustain their missions. Two-thirds (66%) of charities say their financial position has improved compared to last year, and 62% expect further improvement in the next 12 months – a testament to their adaptability and resilience.

Trusted by third sector organisations for decades, Howden recognises that charities’ needs go beyond insurance, which is why many of their solutions go beyond the traditional broking model, providing a holistic approach to managing risks, liabilities, health and safety responsibilities, and cyber security. 

Read the full Rewarding Industries 2025 report

* Howden commissioned Censuswide to survey 314 financial decision-makers working in UK charities between 10/03/2025 and 18/03/2025. The report looks at their experience in three critical areas: turnover, technology and people.