LABOUR'S hefty employer National Insurance hike is coming in days – we explain what it means for you.
From April 6, businesses will have to pay a higher rate of employer National Insurance contributions (NICs) of 15% from 13.8%.
The threshold at which they are paid is also being lowered from £9,100 to £5,000.
The Government confirmed it was making the changes in its Autumn Budget last October in a bid to increase revenue.
It also said the move meant it wasn't increasing taxes for working people.
However, it will have an impact on shoppers and everyday consumers as businesses look to pass on the additional costs.
Here is how you could be affected.
Store prices
A host of retailers and chains have warned they will have to hike prices on goods to cover the cost of the increase in NICs.
In a recent survey of chief financial officers at 52 leading retailers carried out by the British Retail Consortium (BRC), two thirds said they will have to raise prices.
The BRC, which represents UK retailers, also saiditexpects to see food prices rise by 4.2% later this year due to the NIC increase.
In January, boss of M&S Stuart Machin said the retailer wanted to pass costs on “as little as possible” but had been forced to tweak itsbusiness plan for the coming years.
He added any price rises would be “small and behind the market” but did not say how much exactly they would go up by.
Nexthas also said it will need to push through an “unwelcome” 1% rise in prices andlaunch self-service tills to drive down staffing costs.
Halfords has warned it may be forced to push up prices too, as well as Asda, Primark and Sainsbury's.
Price of a pint
A number of pub bosses have cautioned of price rises as they brace for the rise in NICs.
It comes as the hospitality sector also faces temporary business rate relief being reduced from 75% to 40% this month.
Boss of Wetherspoons Tim Martin last month warned of price rises as it faces £60million in extra costs due to rising NICs and wages.
All Bar One owner Mitchells and Butlers (M&B) has said the price of a pint would rise by up to 15p.
Chief executive of Fullers, Simon Emeny, also exclusively told Flying Eze the price of beers at its hotels and boozers would likely rise by 10p.
Marston's has already increased the price of draught beer across its pub estate with drinkers facing an extra 10p more a pint at the bar.
Store closures
Thousands of shops have already closed across the UK in the last 12 months, but more could be coming due to the employer NIC rise.
The Centre for Retail Research said more than 13,000 high street stores were shuttered for good in 2024.
But it said this figure will rise to about 17,350 in 2025 due to the hike to NICs and the rising national minimum wage.
Fashion retailer New Look has said it could close almost 100 shops following the Government's tax raid.
Small shoe chain A. G. Meek is closing one of its stores this month with its boss saying it was due to the NIC hike, a reduction in business rate relief and lower footfall.
Historic department store Beales, in Bournemouth, is also ceasing trading in May with boss Tony Brown telling The Telegraph the business had become “unviable” due to the extra costs associated with the Government's Autumn Budget.
Pension pots, wages and jobs
Economists have warned the employer NIC hike will ultimately be felt by workers in the shape of reduced wage rises.
Not only will the reduced salary rises impact employees in the immediate term, but in the long term as well.
This is because it will see workers with less money to add to their pension pots.
It might also discourage employers from raising how much they contribute to their employees' workplacepensionsin thefuture.
Businesses may also end up laying off staff or taking less workers on in a bid to shore up their finances.
Top tips to boost your pension pot
DON'T know where to start? Here are some tips from financial provider Aviva on how to get going.
- Understand where you start:Before you consider your plans for tomorrow, you'll need to understand where you stand today. Look into your current pension savings and research when you’ll be eligible for the state pension, and how much support you’ll receive.
- Take advantage of your workplace pension:All employers are legally required to provide a workplace pension. If you save, your employer will usually have to contribute too.
- Take advantage of online planning tools:Financial providersAvivaandRoyal Londonhave tools that give you an idea of what your retirement income will be based on how much you're saving.
- Find out if your workplace offers advice:Many employers offer sessions with financial advisers to help you plan for your future retirement.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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