The Treasury has attempted to counter criticism of the so-called “charity tax” measures in Rachel Reeves’ budget by insisting the UK’s tax regime “is among the most generous anywhere in the world.”
Communal charities, including Jewish Care, Norwood, and the United Synagogue, had been among wider organisations in the sector to raise concern about the new measures, including a rise in employers’ national insurance contribution.
In a letter to a newspaper, Claudia Mendoza, the chief executive of the Jewish Leadership Council, even claimed that the tax hikes will damage the fight against antisemitism.
But responding to criticism of the budget, a Treasury spokesperson has now said:“Our tax regime for charities, including exemption from paying business rates, is among the most generous anywhere in the world, with tax reliefs for charities and their donors 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 them with NICs (national insurance contributions) liabilities either gain or see no change next year. Charities will still be able to claim employer NICs reliefs where eligible and are still exempt from business rates.”
JLC-Chair-Claudia-Mendoza-introduces-the-panel. Pic: Yakir Zur
In a letter published by The Independent, the JLC’s Mendoza warned antisemitism “has risen to unprecedented levels since the attacks on Israel in October 2023”, when Hamas terrorists killed 1,200 people.
She claimed Labour’s tax hike will “damage the essential work done by Jewish charities” and lead to contractions “across the whole sector, including all those Jewish charities who are fighting bravely against antisemitism”.
Mendoza added: “Charities of all faiths – as well as secular charities – will be forced to reduce the support they can provide to their beneficiaries, given the charity sector as a whole faces an additional £1.4bn tax bill.
“The chancellor must urgently consider an exemption from this tax rise for the charity sector.
Without this, the services provided by British charities will be reduced – in some cases critically.”
The government would defend its record on the funding of organisations fighting antisemitism in the UK.
Keir Starmer has committed to £70 million of funding over the next four years for CST in order to protect synagogues, Jewish schools, and other communal events across the country.
The chancellor also confirmed a further £2 million in funding for organisations involved in Holocaust education, including the Holocaust Educational Trust.
Reeves’ move to increase employer National Insurance is designed to raise more than £25bn which Labour says will be used to help fix the UK’s “broken” foundations.
As a result of the employer national insurance rise – the biggest tax-raising measure announced by Reeves – the rate paid will rise from 13.8% to 15% and the threshold of employee earnings at which firms start paying the tax will decrease from £9,100 to £5,000 a year.
Rachel Reeves at press conference
The chancellor said this would raise an additional £25bn a year by the end of the parliament, with an increase of 1.2 percentage points on the national insurance paid by employers.
The government also point to the extra £600m ploughed into social care services in government grant funding next year, announced by the chancellor in the budget.
The package was part of a settlement for local authorities in England that will see their available budgets rise by an estimated 3.2% in real terms in 2025-26, compared with this year.
The government also pledged over £250m to test new ways of working in children’s social care next year, including the pre-announced £44m to trial allowances for kinship carers and roll out regional hubs to support the recruitment of foster carers.
Another leading communal source told Jewish News: “At a time when the community have serious concerns about fighting antisemitism and government foreign policy we should be looking to build bridges with government in private.
“Labour’s going to be around for four years minimum, which requires long-term strategy.”
