In this blog, Charlotte Sherman, Policy Manager, explains how the most recent policy decision in the Autumn Budget 2025 could create challenges and opportunities for fundraisers.
Last week Rachel Reeves presented her second Autumn Budget as Chancellor. Whilst macroeconomic policy announcements like this can feel slightly distant from fundraising, events like this are becoming increasingly important for charities who are navigating unprecedented financial challenges. This in turn has an inevitable impact on our members, as ever-rising costs and demand for services, coupled with increased competition for funding, are putting pressure on many fundraisers to meet higher targets and work with fewer resources.
Overall, the response to the budget from the wider sector was that there was a lack of initiatives designed to help charities. Whilst this is a view we share, we remain committed to working with partners to ensure the government understands the challenges fundraisers are facing and will continue to lobby for changes that will strengthen the giving landscape. You can read more about the asks we put forward ahead of this year’s budget here.
On closer reading, however, there are several policy decisions that could have an impact on giving habits and fundraisers’ quality of life:
This is perhaps the biggest win for charities in the whole budget. From 1 April 2026, businesses making donations of goods to charity for distribution to those in need or use in the delivery of their charitable services will be able to benefit from a new VAT relief. This will have a £100 per-item value limit, with a higher £200 limit for a set list of more costly goods, including white goods, furniture, carpets, computers, phones and tablets.
The new relief could open up opportunities for corporate partnership fundraisers to find new opportunities for businesses to support service delivery.
Existing personal income tax and inheritance tax thresholds will remain frozen at their current level until 2031. This will create fiscal drag (when taxpayers are “dragged” into higher tax brackets or have to pay more tax due to increased wage and wealth inflation) which could have an impact on giving habits.
For lifetime giving, people at all levels of wealth will be more conscious of how much disposable income they have. For the majority of the people whose primary income comes from their wages, there is a risk that they will feel worse off. This has certainly been a longstanding issue within the sector and we have seen many charities pivot to accommodate people’s changing financial circumstances, such as giving supporters the chance to play a society lottery, offering payment holidays on regular donations, or investing in supporter experience to improve retention. As we move forward, this increased focus on flexibility and building authentic relationships with supporters will remain essential to preserving income.
Prolonged fiscal drag also opens up opportunities at a national level to promote tax-effective giving. As Remember A Charity points out, this, coupled with the decision announced last year to bring unused pension pots into the scope of inheritance tax, will lead to more estates paying inheritance tax. Although we are still unclear on how this will impact legacy giving habits, some professional advisors have highlighted that it does make the fiscal incentives for charitable bequests more appealing.
Similarly, this could open up opportunities to promote Payroll Giving, which lowers the cost of giving for PAYE employees by allowing them to make donations straight from their pay before income tax. The Chartered Institute Payroll Giving Special Interest Group has been working to raise awareness of this through Payroll Giving Month which takes place every February. To support their efforts, we have created a guide for businesses on how to adopt Payroll Giving and will be working with partners to promote it to businesses throughout the campaign.
The Chancellor also announced a higher-than-expected increase to the National Living Wage and Minimum Wage. From April next year, workers over 21 will see their pay rise by 4.1% to £12.77 per hour (up from £12.21) while workers between 18-20 will get an 8.5% rise to £10.85 per hour (up from £10).
For many face-to-face fundraisers and telephone fundraisers, this will be welcome news. Across the sector, however, concerns have been raised that this coupled with previous announcements to increase employers’ National Insurance Contributions (NICs) will put further pressure on rising costs, which has already led to some charities having to increase their fundraising targets. For now, however, it is unclear what direct impact this will have on fundraisers and we will continue to watch the situation closely through regular discussions with members and our Public Fundraising Operational Management Panel.
Whilst time will tell how the changes outlined above will affect fundraisers and donors, this budget is another reminder of how important it is to monitor the economic and fiscal environment. We will continue to do and provide members with timely insights and advice to help them navigate shifting donor behaviour. If you want to stay in touch, please email policy@ciof.org.uk to subscribe to our quarterly policy bulletin.