Peers have voted in favour of making small charities exempt from the government’s upcoming increase to employer National Insurance Contributions.

The Conservative peer Baroness Neville-Rolfe put forward three amendments to the National Insurance Contributions (Secondary Class 1 Contributions) Bill that would exempt charities with an annual revenue of less than £1m.

All the amendments were accepted by peers during the debate in the House of Lords yesterday. 

They also voted in favour of amendments that would exempt health and social care providers from the upcoming rise, along with providers of transport services for children with special educational needs. 

The government has consistently rejected calls for an exemption for charities from the planned 1.2 percentage point increase to employer National Insurance Contributions, which is due to come into effect in April. 

So it appears unlikely that the amendments will remain in the bill, which will have its third reading in the House of Lords next month. 

The National Council for Voluntary Organisations has estimated the increase could cost the voluntary sector £1.4bn a year.

Neville-Rolfe said the government had remained unmoved at every stage of the bill.

“The minister has been stony-faced and utterly unreceptive to the genuine and deeply felt concerns of millions of businesses and charity trustees across the country,” Neville-Rolfe said

“Noble lords across the house have been contacted by many charities which are facing tough financial decisions.

“We have had many worrying examples throughout the stages of this bill.”

Lord Livermore, Labour peer and financial secretary to the Treasury, said the government recognised the important role charities play in society.

“That is why we have more than doubled the Employment Allowance to £10,500,” Livermore said.

“This means that more than half of businesses, including charities, with National Insurance liabilities will either gain or see no change next year.

“It is important to recognise that all charities can benefit from the Employment Allowance.”

Livermore said the government also provided wider support for charities via the tax regime, with tax released for charities and their donors worth just over £6bn for the year to the end of March 2024.