What the Autumn 2025 Budget means for your charity

• Ahead of each Budget, NCVO and others in the sector develop submissions which outline what's needed from the Treasury.
• Yesterday’s speech from the despatch box on the final fiscal plan laid out a mixed outlook for voluntary organisations.
• Scrapping the two-child benefit cap is a win for charities and campaigners. New investment in children’s social care will help support earlier intervention. Both will ease pressure on some frontline services.
• But support for voluntary organisations overall is limited. Rising wage bills and a freeze on national insurance thresholds will put additional strain on charity budgets.
• At a time when they’re already under immense pressure, many charities will continue to face difficult decisions about staffing, services and sustainability.

The announcement of removing the two-child benefit cap is a historic shift.

3 in 10 children in the UK fall below the poverty line – affecting their opportunities, quality of life and outcomes. Coming into effect from April 2026, the announcement means 450,000 children will be lifted out of poverty.

While more needs to be done to end child poverty completely, this important decision will ease pressure on families, give more children a better start in life and reduce demand on charities supporting families.

Additional funding for children’s social care should also help by strengthening early intervention.

Increases to the National Minimum and Living Wages are a positive step to making sure working people are paid a fair wage that allows them to afford the basics. We hope this means fewer people will need to turn to charities for support.

But many organisations are already stretched, and higher wage costs will add pressure when funding isn’t keeping pace.

Some measures announced will help households. Energy bills will fall for the average household, and train fares and prescription charges will be frozen for a year. These steps may ease demand on some charity services.

But freezing personal income tax thresholds until 2031 will reduce disposable income for many working households. This could increase pressure on advice, debt and community support services.

The charity sector employs almost a million people, so higher wage bills will be hard to absorb. Frozen employer National Insurance thresholds and upcoming changes to salary sacrifice will increase employment costs further.

Many organisations, this means reviewing services and staffing so they can keep delivering within tighter budgets.

New local and regional funding was confirmed, but it won’t solve the wider pressures charities face.

Most of these measures aren’t new, having been announced earlier in the autumn. They include the new High Value Council Tax Surcharge, more funding for mayoral authorities and a growth fund for eleven city regions.

Some of this gives mayors and local leaders more power to raise revenue, which could strengthen local budgets over time.

Charities may benefit if they can access these funds, but much of the investment is aimed at commercial growth rather than community organisations.

Local authorities still lack funding that reflects the true cost of delivering services, and commissioning often rewards the cheapest option rather than the best outcome.

In the wider Budget, the Treasury announced tax changes that will influence how and when people give.

Maintaining inheritance tax thresholds until 2031 means more estates will fall into inheritance tax, which could increase legacy income for some charities.

At the same time, higher taxes on property income, dividend income and savings income may reduce giving from donors who rely on these sources.

The new VAT relief for business donations of goods is welcome and should make it easier for companies to donate items. Most charities still can’t reclaim much of the VAT they pay, so VAT remains a real pressure.

The sector needs both stable public funding and strong giving. Even small shifts in giving can affect the stability of services.

Awareness and consistent use of existing reliefs remain important. Charitable rate relief and Gift Aid continue to play a crucial role in financial stability.

The Budget sets the direction for the year ahead but what charities feel on the ground will depend on how these commitments translate into funding and delivery.

We’ll keep making the case directly to the Treasury Civil Society Forum and across government for decisions that reflect the true cost of running services and the role charities play.

Demand remains high and many organisations are still doing more with less: so it’s vital that the sector is involved early and meaningfully in what comes next – in line with the principles of the Civil Society Covenant.

Our focus now is making sure the funding that follows reaches the organisations supporting communities every day, and that long term stability for the sector sits at the heart of future plans.