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BBC business reporters Tom Espiner and Emma Smith have reported that various companies, including cosmetics company Lush and car repair chain Kwik Fit, are preparing to increase prices in response to the rise in employers’ National Insurance (NI). The increase in NI rates will see employers paying 15% on salaries above £5,000, as opposed to the current rate of 13.8% on salaries above £9,100. The Treasury has noted that the funds generated from this increase will be channeled towards public services such as the NHS.
Lush, with 3,600 employees in the UK and Ireland, anticipates an additional £2.7m expense annually due to the NI hike. Kasey Swithenbank, Lush’s retail head for the UK and Ireland, mentioned that they will gradually implement slight price adjustments throughout the year to mitigate the impact on customers. Kwik Fit, employing approximately 7,000 individuals, expects the NI rises to cost them £6.4m. This increase in costs will inevitably trickle down to prices, affecting recruitment as well.
As businesses gear up to tackle the rise in NICs, a multitude of them have begun evaluating strategies to manage the increased expenses. Various companies have disclosed plans to adjust their prices, freeze or decrease hiring, tighten profit margins, or resort to job cuts. The BBC contacted around 200 businesses and charities to gauge the impact of the NI increase, with responses indicating costs ranging from £1,000 to £39m depending on the organization’s size and employee count. Additionally, roughly 60 businesses that intended to expand their workforce prior to the announcement have had to revise their plans in light of the Budget.
Chief executive of BT, Allison Kirkby, noted that the NI adjustments, amounting to £100m for BT, will prompt the acceleration of anticipated job reductions. She expressed contentment over tax relief on infrastructure investments and planning reforms, highlighting the importance of predictability in taxation and regulation for stimulating growth. Furthermore, Angela Burns, chief executive of the Webb Hotel Group, is estimating an annual expenditure of £200,000 solely due to the NI rises, with total additional costs reaching £600,000 when factoring in minimum wage and pension expenses. Businesses like Jump Xtreme and Union Industries have also shared the challenges posed by the NI changes, necessitating operational adjustments to manage the increased costs
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