Catholics in Fundraising on UK Budget 2025: Implications for charities and philanthropy

The UK Chancellor's Budget 2025, delivered today, sets out a fiscal landscape that will significantly impact charitable giving and fundraising across the country. While we welcome certain measures, including strengthened charity tax relief, we remain deeply concerned about the broader implications for donors, charities, and Catholic organisations.

Key Concerns for Major Donors and Philanthropy

Higher Tax and National Insurance Contributions: Increased fiscal pressure on high-net-worth individuals, combined with the freeze on income tax thresholds until 2030, may deter significant gifts. Some donors had already delayed contributions pending the Budget; these gifts now appear more precarious.

Risk of Philanthropic Flight: Will these measures accelerate the trend of wealthy philanthropists relocating from the UK? This risk is compounded by the Office for Budget Responsibility's (OBR) downward revision of UK growth for 2026 to 1.4%, signalling prolonged economic uncertainty.

Impact on 'Middle England' and Regular Giving

With cost-of-living pressures persisting and tax burdens rising, questions remain: will regular giving and one-off donations from middle-income households hold steady, or decline in the medium term? Charities reliant on grassroots support must prepare for potential contraction.

Education and Equity

The Budget confirmed 20% VAT on private school fees, with no recognition of these schools' role in easing pressure on the state sector or providing bursaries for disadvantaged pupils. Estimates suggest 35,000 children may be forced out of independent schools, increasing strain on public education.

Positive Measures

We welcome the government's commitment to Charity Tax Relief, which remains vital for sustaining giving. For example, Gift Aid continues to deliver over £1.7 billion annually, enabling charities to reclaim tax on donations and maximise impact.

Compliance and Governance

The Budget introduces legislation to strengthen charity tax rules on tainted donations, approved investments, and non-charitable expenditure. While aimed at preventing abuse, these changes will require robust governance and training for charity boards.

Inheritance Tax and Legacy Giving

Anti-avoidance measures will close loopholes, including treating UK agricultural property held via non-UK entities as UK-situated and restricting exemptions to direct gifts to UK charities. This could impact legacy giving and trusts, raising questions about future bequests.

John Green, Chair of Catholics in Fundraising, commented: "Catholic charities face a dual challenge: rising demand for services and shrinking donor confidence. We urge government to balance fiscal prudence with policies that nurture philanthropy, not stifle it. Charity tax relief is welcome, but the cumulative effect of these measures risks undermining the generosity that sustains our mission."

Catholics in Fundraising is the UK's leading network for Catholics working in fundraising. It aims to build a strong community of like-minded individuals, offer insights into best practices, and encourage innovative approaches to fundraising within the Catholic context.

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