Budget 24: Implications for Community Transport

The first Labour budget for 14 years and the first ever by a female chancellor was published yesterday.  Below are some reflections on the main items of interest for Community Transport operators. You can read the full budget statement here.

National Insurance: employer contributions

The tax burden on employers was increased considerably. In the recent Mapping England survey, 65% of operators had a least one paid member of staff, so these changes will affect a considerable part of the Community Transport sector.  

National Insurance Contributions to be paid by employers have been raised by 1.2 percentage points to 15%. The per-employee threshold at which employers start to pay National Insurance will be reduced from £9,100 per year to £5,000 per year, which amounts to an extra £615 per employee per year. These changes will apply from April 2025.

However, to support small businesses and charities with these changes, the government is increasing the Employment Allowance from £5,000 to £10,500 and removing the £100,000 threshold, expanding this to all eligible employers. For many charities, the increase in National Insurance Contributions may be offset by the lifting of the Employment Allowance threshold.

Minimum and Living wage increases

The National Living Wage will also go up by 6.7% to £12.21 per hour for all eligible employees, while the Minimum Wage rates for 18-20 year olds will be increased to £10 per hour. CTA have worked with NCVO to highlight the pressures faced by charities to the Low Pay Commission and we will continue to ensure that the Community Transport sector is represented in these discussions.  

Public Services

The budget included several announcements of increased funding to public services. The largest was to the NHS in England, which is to receive a £22.6 billion increase day to day funding and £3.1 billion capital increase for the next year. This is the largest funding increase to the NHS since 2010. Improving access to health is one of the major priorities in the CTA manifesto and we will continue to work with Health Authorities to ensure operators are supported.  

For Local Authorities in England there is £1.3 billion of new grant funding. Breakfast clubs in England saw their funding tripled and Special Education Needs and Disabilities services (including home to school transport) received a £1billion or 6% increase.

Devolution

Scotland, Wales and Northern Ireland are to receive additional funding in 2025-26, to be allocated by devolved governments in each country. Scotland is to receive an additional £3.4 billion, Wales an additional £1.7 billion and Northern Ireland an additional £1.5 billion.  

Integrated settlements for two English City Regions (Greater Manchester and West Midlands) were announced, to allow elected Mayors to have greater choice about how they use funding in their areas in 2025/26, with the expectation that this will be extended to more Mayoral areas in the following year. Further details will be in the English Devolution Bill.

Transport

There was a small decrease in Department for Transport funding (highlighted in footnotes that this is due to reduction of subsidy to rail, as numbers grow after covid) and most of the announcements of transport investment related to rail.  

However, an additional £650 million has been allocated local transport and the Transport Secretary will set out further detail on how this funding will be allocated.  

As previously announced, the Bus fare cap was extended to December 2025, with the capped fare increased to £3. However, the accompanying text suggests that this extension is to allow the government to look at a different model of funding in the future.  

Fuel

The 5p cut to fuel duty on petrol and diesel, due to end in April 2025, has been given a one-year extension and there will be no Retail Price Index increase to duty in 2025-26.  

The government will incentivise the purchase of electric vehicles by widening the differentials in Vehicle Excise Duty First Year Rates between electric vehicles and hybrids or internal combustion engine cars. There was also an announcement of further investment in the charging network and £120 million to encourage the take up of electric vans, and for the manufacture of wheelchair accessible electric vehicles.  

Charities

Reform to charity tax rules to prevent abuse and ensure that tax relief is given only to charities were announced, to start from April 2026. Private Schools will see their charitable business rate relief removed from April 2025, subject to legislation.

The government also discussed work with the voluntary sector to develop a ‘Social Impact Investment Vehicle’ to deliver targeted investment to tackle social problems. However, details of this scheme are yet to be announced.  

Summary

CTA welcome the increased level of investment in the Public Sector, and we will be working with Devolved Government, Local and Health Authorities, to ensure that Community Transport is part of the discussion when allocating these funds. Likewise, the continued freeze of fuel duty will be valuable to the sector.

However, we recognise that that many Community Transport organisations will face added financial pressures as employers, due to the increases to the National Living Wage and potentially due to changes in National Insurance Contributions. If you need advice or support about any of these issues, please reach out to the CTA advice line on 0345 130 6195 or email advice@ctauk.org