The UK’s largest supermarkets are set to face a collective £200 million increase in National Insurance contributions due to a two-percentage point hike in employer contributions outlined in the latest Budget.
- Tesco, Sainsbury’s, Asda, and Morrisons are expected to absorb significant portions of this increased burden.
- Analysts predict Tesco alone could see an additional £75 million added to its expenses.
- There are warnings from major retailers that such tax hikes could complicate economic recovery post-pandemic.
- Minimum wage increases are also on the horizon, adding further financial pressures on retail giants.
In the latest Budget statement, the Chancellor announced a rise in National Insurance contributions, with employer contributions set to increase by two percentage points. This decision is anticipated to collectively cost the UK’s largest supermarkets an additional £200 million. Among those affected, Tesco, Sainsbury’s, Asda, and Morrisons are poised to bear the brunt.
Tesco, which employs approximately 300,000 people in the UK, may face an additional £75 million in National Insurance expenses alone. The increase comes as a part of broader efforts to balance the nation’s finances post-pandemic, though it has received criticism from business leaders.
Stuart Machin, CEO of M&S, has voiced concerns over the strategy, labeling it a “short-term, easy fix” that risks further complicating the country’s economic recovery. Machin noted that National Insurance is a tax that affects larger employers disproportionately and warned of its potential adverse impacts on job creation.
As the financial strain intensifies, retailers are also bracing for hikes in wages. From April 2025, the National Living Wage will see a 6% rise, increasing to £12.21 per hour, while those aged 18 to 20 will witness a £1.40 hourly increase, reaching £10 hourly. This development brings additional staffing costs to businesses already grappling with increased operational expenses.
The rise in wages has been welcomed by worker unions such as Usdaw, whose general secretary, Paddy Lillis, expressed support for measures aiming to ensure fair pay. The union sees these changes as progressive steps towards establishing a statutory real living wage and eliminating disparate youth rates.
The combination of increased National Insurance contributions and impending wage hikes poses significant challenges for the UK’s largest supermarkets.
