Factbox: UK firms flag hundreds of millions in costs from increase in national insurance, wages
21/11/2024 13:40
(Adds comments from IDS, Mitie, Restore Plc, CVS Group,
Trascis, Knights Group, Begbies Traynor, Genuit and Zinc Media)
Nov 21 (Reuters) - British companies have flagged an
increase of about 820 million pounds ($1.04 billion) in costs
related to a rise in employers' social security contributions
following Finance Minister Rachel Reeves' maiden budget in
October.
They also expect the increase in National Insurance
Contributions (NIC) that employers pay and the minimum wages to
fuel inflation.
Here's what some companies across sectors have said so far:
RETAILERS
British supermarket chain Sainsbury's SBRY.L , which
employs around 150,000 people, said it was facing headwinds of
140 million pounds from the national insurance change.
Marks & Spencer MKS.L said the national insurance increase
would cost it around 60 million pounds in its next financial
year, which starts in April. A 6.7% rise in minimum wage will
add another 60 million pounds.
Britain's third-largest supermarket Asda said the national
insurance change would cost it 100 million pounds next year and
warned it would "probably be inflationary to some degree".
Primark-owner Associated British Foods ABF.L said the
national insurance change would cost the clothing retailer,
which employs 40,000 people in the UK, "tens of millions" of
pounds, though the rise in the minimum wage was anticipated.
Kitchen and joinery retailer Howden Joinery HWDN.L said
the expected annualised cost impact of higher contributions to
employers' national insurance and the increase in the national
minimum wage was around 18 million pounds.
LOGISTICS
International Distribution Services IDSI.L , the owner of
Royal Mail, which employs nearly 130,000 people in Britain, said
changes to the NIC will cost around 120 million pounds a year.
TELECOM
BT BT.L , employer of more than 100,000 people, said the
NIC change would increase its costs by close to 100 million
pounds next year, about 0.5% of its total cost base.
PUBS & RESTAURANTS
JD Wetherspoon JDW.L , a major British pub operator that
employs more than 40,000 people, said its annual costs would
increase by about 60 million pounds in 2025, with its NIC rising
by an estimated two-thirds.
British pub group Young & Co's Brewery YNGa.L , which
employees about 7,700 people, warned that rising NIC and minimum
wages will increase its annual costs by about 11 million pounds,
starting April.
HOMEBUILDERS
Persimmon PSN.L expects costs from a hike in national
insurance to be about 5 million pounds over the next year.
Vistry VTYV.L also estimated a 5-million-pound impact in
fiscal year 2025 from the increase in employer NIC.
OUTSOURCERS
Serco Group SRP.L said the UK government's national
insurance tax changes would increase its direct labour costs by
around 20 million pounds per year and that it was exploring ways
to offset these costs.
Mitie Group MTO.L estimated an increase of nearly 60
million pounds in costs in fiscal 2026 from the NIC changes, a
spokesperson told Reuters.
SERVICE PROVIDERS
Office services provider Restore Plc RSTP.L which employs
nearly 2,700 people, said it estimates about 3 million pounds in
costs from the NIC change and minimum wage hike.
Veterinary services provider CVS Group CVSG.L , which
employs more than 8,800 people, said it estimates a cost impact
of about 8 million pounds in 2026 from the NIC changes.
British rail industry services provider Trascis TRCS.L
also said the NIC change and minimum wage increase are expected
to impact 2025 core profit by about 500,000 pounds.
Legal and professional services provider Knights Group
KGHK.L said it expects an annual cost impact of about 2
million pounds in 2026 due to the NIC increase.
Business recovery and property services consultancy Begbies
Traynor BEG.L estimates the NIC changes to increase employment
costs by about 1.25 million pounds per annum.
MANUFACTURER
Genuit Group GENG.L expects the NIC and minimum wage hikes
to add nearly 5 million pounds to its cost base in 2025.
MEDIA FIRM
Media production firm Zinc Media ZIN.L expects the NIC
changes to increase its cost base by about 400,000 pounds
annually.
(Source: Company announcements, Reuters reporting)
($1 = 0.7911 pounds)
(Reporting by Prerna Bedi, DhanushVignesh Babu and Yadarisa
Shabong in Bengaluru; Editing by Shilpi Majumdar, Shinjini
Ganguli and Shounak Dasgupta)
((Prerna.Bedi@thomsonreuters.com; +91 98052 24616))