Today, the Chancellor announces a significant increase in National Insurance contributions, affecting major UK supermarkets.
The UK’s largest supermarkets, including Tesco, Sainsbury’s, Asda, and Morrisons, are expected to incur an additional £200 million in National Insurance payments as a result of the government’s latest budget adjustments. The increase comprises a two-percentage point rise in employer National Insurance contributions, a development first reported by Sky News.
Analysts estimate that Tesco, with around 300,000 employees in the country, might see an increase of £75 million to its National Insurance bill. This financial burden comes amidst warnings from business leaders about the potential detrimental impact on economic recovery. M&S chief executive Stuart Machin recently criticised the government, suggesting that raising business taxes is a ‘short-term, easy fix’ to economic challenges and will only hinder recovery.
Machin expressed concern over the decision to increase National Insurance and highlighted that this tax, which does not correlate with profits, adversely affects both major and smaller employers. He recalled the Chancellor’s previous remarks on National Insurance being a tax on workers, noting that increasing it complicates the task of offering employment opportunities.
This tax hike accompanies forthcoming rises in wage bills. The minimum wage is set to increase by 6.7%, and the National Living Wage will rise by 6% from £11.44 to £12.21 per hour, effective from April 2025. There will also be a £1.40 per hour rise in the minimum wage for those aged 18 to 20. Paddy Lillis, the general secretary of the retail workers’ union Usdaw, welcomed these pay increases, which align with Labour’s new directive for the Low Pay Commission, marking progress towards establishing a living wage.
This policy change signals a significant moment for the retail sector, as it grapples with higher costs both from increased National Insurance contributions and rising wages. Retailers are now faced with navigating these financial pressures while maintaining their competitive stance in a challenging economic environment. Their ability to adapt to these changes will undoubtedly shape the future landscape of the UK retail market.
The latest budget changes represent a substantial challenge for large UK retailers, compelling them to adjust to increased financial obligations.
