The charity sector continues to be stretched, with many organisations struggling to secure the funding needed to deliver their charitable aims. There was understandably hope that the Autumn Budget 2026 would include measures aimed directly at supporting the sector.
Whilst no significant charity-specific support was announced, Chancellor John Healey’s Budget focused on protecting households and businesses from the ongoing “global economic storms” and providing greater stability for families and communities.
While there were few direct measures for charities, several announcements may still benefit the sector indirectly through support for communities, regeneration, housing and household finances.
Energy Costs and Cost-of-Living Pressures
Whilst no direct support was announced for charities’ own energy costs, several measures aimed at easing pressure on households may indirectly benefit charities and the communities they serve. These include:
• A £100 Household Energy Payment for up to 20 million households in England, with equivalent funding being provided across the rest of the UK.
• An extension of the temporary VAT reduction on electricity bills until 1 July 2027, reducing the Ofgem annual household energy bill by around £50 from April 2027.
• Plans to abolish gas standing charges and move costs into unit rates, giving households greater control over what they pay for energy.
• A new Warm Homes Loan Scheme to help households fund solar panels, batteries and heat pumps, with potential annual savings of up to £550 on household energy bills.
• An extension of the 5p fuel duty cut until July 2027, helping to reduce transport costs for both households and charities operating vehicles.
For charities supporting those experiencing poverty, financial hardship, debt or homelessness, any measures that improve household finances may help ease pressure on beneficiaries and reduce demand for crisis support services. Whilst the impact will vary across the sector, these measures may provide some welcome relief to the communities many charities exist to support.
Employment Taxes and Workforce Costs
Rising employment costs continue to be one of the biggest financial pressures facing charities.
Key upcoming changes include:
• From April 2027:
o National Living Wage increasing by 3.9% to £13.21 per hour.
o National Minimum Wage for 18 to 20-year-olds increasing by 3.9% to £11.27 per hour.
• Income Tax and National Insurance thresholds remaining frozen until April 2031.
• Mandatory payrolling of benefits from April 2027. Charities and their trading subsidiaries should begin ensuring their payroll systems are capable of reporting benefits in kind ahead of implementation.
• Salary sacrifice pension contributions above £2,000 becoming subject to National Insurance from April 2029.
Charities may wish to continue monitoring previously announced initiatives such as funded apprenticeship opportunities and wider youth employment programmes where these align with workforce needs and recruitment plans. With staffing often representing a charity’s largest cost, these changes will be an important consideration when budgeting and planning for future service delivery.
High Street and Community Regeneration
Charities and Community Amateur Sports Clubs (CASCs) will continue to benefit from the existing 80% mandatory charitable rates relief, with local authorities retaining discretion to increase relief to 100%. Whilst charitable business rates relief remains unchanged, the £210 million Community Assets Programme may create new opportunities for charities, social enterprises and local community groups.
Announcements include:
• £10 million Regional Cooperative Development Programme to help and grow co-operative economies.
• £65 million Community Ownership Fund to help communities acquire local buildings and assets.
Further details are expected during 2027, but for charities involved in community development, regeneration and place-based initiatives, these programmes could provide valuable opportunities to secure funding and preserve community assets.
Housing and Social Housing
One area worth watching is the Government’s commitment to social housing, including their consultation to introduce zero rated VAT treatment of land intended for the construction of new social housing. If the proposals lead to a simpler and more favourable VAT framework, they could reduce irrecoverable VAT costs and support the delivery of affordable housing developments. As many charities see the impact of housing shortages first-hand, any measures that support housing supply could have wider benefits across the sector.
VAT
There were relatively few VAT announcements likely to affect charities directly. Key measures include:
• A new zero-rate for donated medicines.
• A consultation on the potential introduction of zero-rated VAT treatment of land intended for social housing (as discussed above).
• From October 2027, online marketplaces will become responsible for collecting VAT on certain sales. Charities operating trading subsidiaries through online platforms should consider whether these changes will affect their existing arrangements.
Corporation Tax
No Corporation Tax changes were announced specifically for charities. However, the Government has launched a consultation on simplifying Corporation Tax administration, including for charities, CASCs and other not-for-profit organisations. Whilst only a consultation at this stage, it presents an opportunity for the sector to highlight areas where compliance obligations can be simplified, and reporting processes improved.
Final Thoughts
For a sector facing rising costs, increasing demand and continued pressure on funding, the Autumn Budget 2026 may feel like a missed opportunity for direct support. Whilst rising employment costs remain a significant challenge, measures aimed at supporting households, investment in community regeneration, developments in social housing and ongoing tax consultations will provide indirect benefits to charities and the communities they serve.
As always, the headlines rarely tell the whole story. Much of the detail is still to come and, for many charities, the practical implications will only become clear as further guidance and legislation is released.
At BHP, our charities team will continue to monitor developments closely and help clients understand what the changes mean for them, identifying both risks and opportunities as the detail emerges. In the meantime, charities will no doubt continue doing what they do best: making a positive difference to the communities they serve despite an increasingly challenging operating environment.
This material is for informational purposes only and should not be relied upon as professional advice.
