Businesses battling budget bombshells
Businesses are now facing a host of rises in their business costs – most notably National Minimum Wage and NICs for employers. NR spoke to a number of retail and wholesale businesses across Northern Ireland to find out just what this means for them and the steps they are taking to minimise the impact.
In October 2024, Chancellor of the Exchequer Rachel Reeves put forward the first Labour Budget in 14 years, announcing a raft of measures which would impact the retail sector and SMEs generally. Since then, they have been weighing up the financial impacts on their costs and what this will mean for their employees and their businesses.
Some of the key measures for employers were a 1.2 percentage point increase in employers’ National Insurance Contributions from 6th April – taking the rate to 15%, while the threshold at which businesses will start paying will drop – from £9100 to £5000.
Additionally, the annual employment allowance, which currently reduces the employer’s NIC liability of eligible employers by up to £5000, will increase to £10,500 and the qualifying requirement to have a total secondary Class 1 NIC liability of less than £100,000 in the prior year will be removed.
Meanwhile, from 1st April the National Living Wage for employees aged 21 and over will increase to £12.21 per hour, while the National Minimum Wage will also increase to £10 per hour for those aged 18 to 20 and up to £7.55 for those aged 16 to 17.
Noted as being the largest increases to rates on record, it is the retail sector which will be hardest hit. Retail has long been the sector taking on younger employers, with many at school and university often experiencing retail as their first foray into the world of employment.
In the wake of the Budget, retailers and the wider grocery industry have been coming to terms with the full reality of what this will mean for their business, many of which are SMEs in the region, as they assess the potential implications for them.
NR spoke to several businesses in the sector across Northern Ireland, giving them the opportunity to voice their concerns and outline clearly the impact on their businesses.
WE CAN’T RECRUIT NEW STAFF
Judy Mercer is owner of Hamilton News on Belfast’s Cregagh Road. Her and her husband, Bill have been in business for over 40 years and has witnessed some significant changes in the industry across those four decades.
She said they have had to put a refit to one of their businesses on hold because of the tax increases.
“Our initial reactions to Budget was that we, as independent retailers would have very serious decisions come April,” said Judy.
“There was nothing in the Budget to help the self employed.”
Judy added that they have worked out that the cost to their business will be in excess of £15,000 per annum.
“We will look to reducing our staffing costs by not recruiting and by reducing overtime and holiday cover,” she added.
“We had planned to refit one of our businesses this month, but this has been put on hold until we see how things pan out. There will be no recruitment of staff again until we see how things go.
“We have been having discussions with managers to look at cost savings and making the business more profitable to help with the impending rises have been in place since last year.
“We have also looked into new initiatives to help drive footfall for the future, ie. 10% pensioners discount on a Tuesday, with more to follow to attract new business in.”
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