High Street retailers have asked Chancellor John Healey to reverse a National Insurance tax policy implemented in 2024, stating that the change, along with minimum wage increases, has cost the sector approximately £6.5 billion and led to 115,000 job losses.
The policy, announced by former Chancellor Rachel Reeves, reduced the annual salary threshold for employer National Insurance contributions (NICs) from £9,100 to £5,000. Effective April 2025, the NICs rate also increased from 13.8% to 15%.
This adjustment has increased the tax burden on employers, particularly affecting those employing younger workers or part-time staff. The British Retail Consortium (BRC) estimates that the change in the NICs threshold alone cost the sector £1.74 billion.
The BRC, which represents major retailers including Sainsbury's and Tesco, has written to Healey requesting an increase in the threshold to £6,000. The organization argues this change would help businesses hire more staff and mitigate some of the economic damage.
BRC chief executive Helen Dickinson emphasized the retail sector's potential to help address youth unemployment, noting that "the sector is uniquely placed to play a central role." The pleas come ahead of the government's October budget, with businesses hoping for policy adjustments to align with the government's stated commitment to "restoring high streets and bringing back hope across Britain."
Dickinson highlighted that increased employment costs, coupled with rising energy bills, packaging taxes, and business rates, have "reduced the industry's capacity to invest, create opportunities for young people and support growth." The upcoming budget is seen by the BRC as a potential "turning point" to support government objectives for growth, jobs, and vibrant high streets.
Retailers are also seeking government action on additional levies on energy bills and relief on business rates increases. Additionally, the Association of Convenience Stores has urged the government to maintain control over employment costs and ensure workplace reforms facilitate, rather than hinder, job creation. Retailers express concern that proposed workers' rights reforms could introduce additional red tape and administrative burdens, making flexible employment arrangements, such as those for students and temporary Christmas workers, more challenging.