UK Autumn Budget 2026: Good news for beneficiaries, bad news for charities

The chancellor’s Autumn Budget 2026 was framed as “breathing space for today, fresh hope for the future.” In part, it delivers.

The Budget helps the people charities serve – real cost-of-living relief through a higher living wage, rough sleeping support, housing investment and backing for a violence-against-women strategy. But it also creates or sustains pressures for the charities supporting those causes.

What is most striking is what was not said. There was little mention of the charity sector or civil society. Civil society organisations submitted detailed pre-Budget submissions outlining their needs: low-cost support measures, Gift Aid improvements, multi-year funding certainty. None appear in the final Budget. That presents a challenge for trustees.

What rising payroll costs mean for charities

From April 2027, the National Living Wage rises by 3.9% to £13.21 per hour. That is important for those at the sharp end of the cost-of-living crisis, but a direct cost increase for any charity that employs staff on or near the minimum wage. Rising payroll is nothing new, though, and it’s a change charities will largely accept.

The real pressure comes from the National Insurance threshold freeze, locked in place until 2031. This isn’t a headline rate rise. It means every pay increase pulls more of the wage bill into the National Insurance column. For larger operational charities, this could add tens of thousands of pounds to National Insurance costs over three years.

The timing creates a problem. Costs rise from April 2027, but income from contracts and donors can lag by months or years. Charities cannot absorb these costs through margin compression. The gap will need to be closed through service adjustment, staffing changes, or securing additional funding – none of which is straightforward or quick.

Tax changes and charity donors: what the Budget means for giving

The Budget expects to raise £26 billion in new taxes, including a mansion tax on properties over £2 million and removal of National Insurance relief on salary-sacrificed pension contributions above £2,000 (from April 2029).

These measures help household finances for higher earners. Over time, this may improve their capacity to give, just as one might hope corporates reconsider charity partnerships. But neither offers a clear line to more giving.

For charities, then, unrestricted income remains under pressure. Donor fatigue will likely intensify as financially burdened households tighten spending.

Local authority funding: why charity commissioning contracts are under pressure

Local authority core spending power is set to rise by 3-4% in real terms between 2025 and 2028 – nowhere near expected inflation, which could hit 4% next year alone.

Talk of a National Care Service is tied to a future election mandate, meaning councils face mounting pressures on social care alongside housing and children’s services. There is little headroom to uplift charity contracts. For charities reliant on commissioning, margins will continue to erode.

And then, after 2028, the picture worsens. Discretionary fiscal tightening begins in 2029–30. That’s when central government’s deficit reduction efforts become more aggressive, and councils will face real-terms spending cuts.

To cope best, charities need to prepare now, with clear evidence of impact and options for service redesign. Renegotiating contracts after the tightening begins will be far harder.

Where the Budget supports charities

The Budget is not uniformly bleak. Notable measures include:

• Rough sleeping receives additional funding.
• Social and affordable housing gets £1.5 billion in new funding.
• Violence against women and girls initiatives receive strategic backing.
• Community Development Finance Institutions benefit from £165 million in investment – opening new financing pathways for charities in housing and financial inclusion.
• Mileage allowances for volunteers increase to 55p per mile for the first 10,000 miles and 35p thereafter from April 2027, reducing the cost burden on organisations that rely on volunteer transport.

These are real tailwinds, but they are narrowly focused. If your charity operates in these sectors, the Budget offers genuine support and should inform your strategy. If you operate elsewhere, you face the structural pressures outlined above with fewer mitigating factors.

Place-based devolution

Devolution is arguably the main area of opportunity for place-based charities to engage with new local power structures.

The Budget announces a fundamental reorientation of how government spending is allocated. Through “Rewiring the State,” powers and resources are being devolved to Mayoral Strategic Authorities and local leaders across England.

Historically, many charities accessed funding through national programmes or central commissioning. Devolution means power and budgets move to the local level. This has generally been welcomed by a charity sector accustomed to supporting its local community.

For trustees, this means strategic repositioning. Charities need to understand which Mayoral Strategic Authority areas they operate in and begin building relationships with local leaders now. The next spending review in 2027 will embed these arrangements. Charities without established local relationships will face a more fragmented, harder-to-navigate funding landscape.

Trustee actions at a glance

1. Reforecast payroll now. Model different pay rise scenarios and National Insurance exposure through 2031. Understand your cost base before April 2027 rises take effect.
2. Prepare commissioning evidence. Document impact and prepare options for service redesign. Use these when renegotiating contracts, particularly before 2029–30.
3. Map local relationships. Identify which Mayoral Strategic Authority areas you operate in. Begin building relationships with local leaders and commissioners now.
4. Build contingency plans for 2029–30. Fiscal tightening will intensify. Plan for reduced commissioning income and smaller funding uplifts from that point.
5. Review reserve policies. Ensure you have accessible reserves and can act decisively when needed.
6. Broaden fundraising mix. Unrestricted income will remain under pressure. Diversify sources.

How we can help

We work with charities across the UK to provide clarity, confidence and practical solutions on:

• Investment management: Building portfolios that balance income, growth, and risk, aligned with your mission.
• Liquidity planning: Ensuring reserves are accessible when needed, without forced sales in volatile markets.
• Payroll and cost planning: Understanding the financial implications of wage inflation, National Insurance changes, and commissioning pressures – and building these into long-term strategy.
• Governance support: Helping trustees document decisions, strengthen compliance, and meet regulatory expectations.
• Sector insight: Staying ahead of policy shifts and helping charities build resilience.

Whatever your priorities, contact us today to navigate these changes and build resilience into your strategy.

A full breakdown of the Budget measures can be found on the government’s website.

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About the author

Jeffrey Ball

Director, Wealth Manager – Charities

Jeffrey joined RBC Brewin Dolphin in 2010 as a graduate trainee and is now a Wealth Manager in the Newcastle and Penrith offices. He is part of the North East Charities team, managing investment portfolios for charities of all sizes across the region. Aside from investment management, a large part of his role is networking to find new charity clients.

He is part of the Group’s Corporate Responsibility Committee, helping create the nationwide Charity Partnership model. As part of this, every office in the Group selects a local Charity partner to help raise funds and awareness for. He is also co-founder of the North East Charity Awards and a trustee for the Newcastle Rugby Foundation and Rockets Community Foundation.

Jeffrey, who was nominated for the COLWMA National Investment Manager of the Year in 2021, is a Chartered Fellow of the Chartered Institute for Securities & Investment. He also has a CFA Institute Certificate in ESG (Environmental, Social and Governance) Investing. Away from the office he is a national award-winning volunteer for his work in grassroots rugby league.

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FAQs

How does the Autumn Budget 2026 affect charities?

There is no sector-wide package for charities, so the effect depends on your staffing costs, your main funders and where you operate.

What are the new minimum wage rates from April 2027?

The National Living Wage rises 3.9% to £13.21 an hour. The National Minimum Wage rises 3.9% to £11.27 for 18 to 20-year-olds, and to £8.31 for 16 to 17-year-olds and eligible apprentices.

Did the Budget include Gift Aid changes?

No. The Budget document contains no Gift Aid measures, so the existing rules continue to apply.

What are Mayoral Strategic Authorities, and what funding do they receive?

They are regional bodies in England led by an elected mayor, and they are gaining devolved powers and budgets. The Budget gives local leaders £285 million of transitional seed funding in 2027-28. A £1.5 billion devolved borrowing facility for these authorities opens from April 2028.

What counts as charity reserves?

Reserves are the part of a charity’s unrestricted funds that is freely available to spend on any of its purposes. Restricted funds, designated funds and fixed assets used to run the charity are not counted. See the Charity Commission guidance.

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The value of investments, and any income from them, can fall and you may get back less than you invested. Information is provided only as an example and is not a recommendation to pursue a particular strategy. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

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