Chancellor John Healey delivered the Budget on 28 October 2026. NCVO, the Charity Finance Group and the Chartered Institute of Fundraising all expressed disappointment at the lack of direct support, Civil Society reported. The Charity Finance Group did note that the Budget added no major new costs for charities beyond the minimum wage increases.
The Charity Tax Group said the Budget speech contained no fundamental changes to charity tax reliefs, in its initial reflections. The increase to the Small Business Rate Relief threshold does not help charities that claim charitable rate relief, because they are not eligible for it, Third Sector notes.
However, the lack of a charity package does not leave charity finances untouched. The NLW rise, the mileage rates and the move to payrolling benefits in kind all start from April 2027, and each carries a cost or a process change for a charity’s 2027/28 budget.
National Living Wage rise from 1 April 2027
From 1 April 2027 the National Living Wage rises by 3.9% to £13.21 an hour. HM Treasury says that is £910 a year more in gross pay for a full-time worker on the National Living Wage. The rate for 18 to 20 year olds rises to £11.27.
The question for trustees is whether funding rises with it. NCVO warned that organisations delivering public services are unlikely to receive the grant and contract uplifts needed to cover the increase. Three places to check:
- Grants agreed at fixed sums. Restricted funds cover only what the funder agreed to cover. Anything above that comes from unrestricted reserves unless the grant is renegotiated.
- Fixed-price contracts. Without an uplift mechanism, the charity carries the cost until the contract is repriced.
- Pay differentials. When the floor rises, roles just above it get squeezed, so the full cost is usually more than the uplift to the lowest grade.
Mileage rates and benefits in kind from April 2027
The 55p tax-free rate for the first 10,000 business miles a year is now permanent. The rate above 10,000 miles rises from 25p to 35p from 6 April 2027, as confirmed in the Budget’s household impact analysis and by the Chartered Institute of Payroll Professionals. These are the most a charity can pay tax-free, not an obligation, so trustees should decide and record what the charity will pay to staff and to volunteers.
HMRC’s guidance phases in mandatory payrolling of benefits in kind from 6 April 2027, starting with company cars, car fuel, vans, van fuel and employer-provided medical benefits. The remaining benefits follow from 6 April 2028. A charity that reports these benefits on a P11D today will need its payroll provider to be ready.
Funding announced for particular causes
The new money is aimed at specific areas. Third Sector reports £432m over two years to tackle rough sleeping, and up to £5m a year for three years for charities including the Dolly Parton Imagination Library and BookTrust. The Budget also adds £1.5bn to the Social and Affordable Homes Programme, LocalGov reports. The Charity Tax Group welcomed the VAT reform for social housing, covered in VAT zero rate on social housing land from April 2027. Charities working in these areas should look at the detail. Others should not assume a wider benefit.
Questions to put to your finance team
- What does the 3.9% rise cost across every funded project, not only the payroll total?
- Where will restricted income fall short, and have we raised the gap with the funder?
- Which commissioner contracts have an uplift clause, and when is the next price review?
- Have trustees decided and recorded the mileage rate we will pay?
- Do we know every taxable benefit we provide, and has our payroll provider confirmed it is ready for April 2027?
Frequently asked questions
Did the Autumn Budget 2026 change Gift Aid?
The Charity Tax Group said the Budget contained no fundamental changes to charity tax reliefs, so Gift Aid continues under the existing rules.
When does the National Living Wage rise?
On 1 April 2027, by 3.9% to £13.21 an hour for workers aged 21 and over.
Will charities receive extra funding to cover the wage rise?
No sector-wide measure was announced. Charities should check each grant and contract for an uplift mechanism and raise any shortfall with the funder early.
Is the 55p mileage rate now permanent?
Yes, for the first 10,000 business miles a year. The rate above 10,000 miles rises to 35p from 6 April 2027. Both are maximum tax-free amounts, and the charity chooses what to pay.
Talk to our charities team
UHY Williamson Croft’s charities and not-for-profit team works with trustees and finance teams across Liverpool, Manchester and the Wirral on budgeting, accounts, audit and assurance. To discuss how these changes affect your charity, get in touch or call Taylor Rogers on 0161 399 0121 (Manchester) or 0151 303 3112 (Liverpool).
Further reading: Autumn Budget 2026: key tax changes for businesses, owners and individuals