Significant changes to national insurance will impact business costs substantially.
- The Chancellor’s decision raises employer contributions from 13.8% to 15%.
- Primark predicts its costs will increase by ‘tens of millions’.
- The threshold for employer contributions is lowered to £5,000.
- High street retailers like Primark will feel a disproportionate impact.
Primark’s CEO, George Weston, has raised concerns over a surge in business costs due to a forthcoming rise in national insurance employer contributions. This change was announced in Chancellor Rachel Reeves’ first Autumn Budget and will come into effect in April 2025. The increase from 13.8% to 15% marks a significant adjustment for businesses.
Weston has projected an increase in costs by ‘tens of millions’ for Primark, highlighting the financial burden on the British high street. He emphasised that high street city centre businesses, whether in food or retail, will be more affected compared to other sectors.
The upcoming changes also include lowering the threshold from £9,100 to £5,000, at which employers start paying national insurance on employees’ earnings. This policy shift is viewed as disproportionately affecting high street retailers, which often operate with tighter margins.
Despite these looming cost challenges, Primark reported a strong performance with adjusted operating profit rising by 51% to £1.1 billion, driven by increased sales and margin recovery. Sales saw a growth of 6%, attributed to competitive pricing, a unique store experience, and enhanced digital engagement.
The planned increase in national insurance will notably heighten the financial pressures on Primark and similar high street retailers.
