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Charities gain from allowance on national insurance contributions from 2014

Treasury says the Budget measure will be worth about £45m to 35,000 charities

Charities will benefit from a £2,000 employment allowance towards their bill for national insurance contributions from April 2014, Chancellor George Osborne announced today in the Budget.

A Treasury spokeswoman said that this allowance would be worth about £45m to 35,000 charities.

The allowance of £2,000 a year will cover all businesses and charities and will be offset against their employer NI contributions bill from next year.

Details released alongside the Budget said that on average employers with fewer than 10 employees over the course of the year would have their employer NI bills reduced by 80 per cent.

"The employment allowance will reduce the cost of taking on new staff for small businesses; supporting those with an ambition to grow by hiring their first employee or expanding their workforce," the document said. "Every business will be able to employ one worker on a salary of £22,400, or four employees working full time on the adult national minimum wage, without paying any employer national insurance contributions at all."

It said the allowance would be simple to administer and that employers would need only to confirm their eligibility through their regular payroll processes.

Alex Swallow, chief executive of the Small Charities Coalition, said the allowance could make a big difference to the smallest charities. "For a lot of the smallest charities, having one paid member of staff is a big step forward," he said. "And having this allowance now helps them to do that, so it is a very positive thing."

Karl Wilding, head of policy and research at the National Council for Voluntary Organisations, said the allowance could enable the voluntary sector to help with the country’s unemployment challenges. "If this means that voluntary organisations can help by taking on more staff, then I think it is a very positive thing," he said. "To a small organisation, £2,000 is a lot of money."

- See our Big Issue for all the latest Budget 2013 news

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