Published : 3 days ago, on 05/12/2024

(This Nov. 27 story has been corrected to say that Pets At Home and Halfords expect an increase in costs from a rise in both NIC and minimum wages, not just NIC)

(Reuters) – British companies have flagged an increase of 1.1 billion pounds ($1.40 billion) in labour costs related to a rise in employers’ social security contributions and minimum wages following Finance Minister Rachel Reeves’ maiden budget in October.

They also expect the increase in National Insurance Contributions (NIC) and the minimum wages to fuel inflation.

Here’s what some companies across sectors have said so far:

RETAILERS

British retailer Pets at Home Group said it expected costs to rise by about 18 million pounds in fiscal 2026 due to increased NIC and minimum wage.

British bicycle and car products retailer Halfords Group forecast its future costs to increase by around 23 million pounds in fiscal 2026 due to higher employer social security contributions and minimum wage.

Tile retailer Topps Tiles said it estimated a 4 million pound cost impact on an annual basis from April 2025, out of which 2 million would impact the 2025 financial year.

Home improvement retailer Kingfisher, which employs more than 78,000 people, said the increase in NIC would cost it about 31 million pounds in fiscal 2025/26.

British supermarket chain Sainsbury’s, which employs around 150,000 people, said it was facing headwinds of 140 million pounds from the national insurance change.

Marks & Spencer 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.

Asda, Britain’s third-largest supermarket, 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 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 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.

Mike Ashley-owned Frasers called the budget a ‘kick in the face’ and said it would cost the retailer at least 50 million pounds in added costs going into its 2025/26 year.

Flooring firm Headlam Group said that the unexpected reduction in the national insurance threshold, combined with the increase in the national minimum wage, will add about 2 million pounds to its annual operating costs from April 2025.

Supreme, which sells Duracell and Energiser batteries along with Elf Bar vapes, said it expects an addition of 0.9 million pounds to its annualised people costs due to the changes in National Insurance and National Living Wage.

LOGISTICS

International Distribution Services, 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, an 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

Pub group Mitchells & Butlers flagged the NIC change to increase its cost to 23 million pounds per annum. It also said the minimum wage hike would add another 42 million pounds annually.

JD Wetherspoon, 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, which employs about 7,700 people, warned that rising NIC and minimum wages will increase its annual costs by about 11 million pounds, starting April.

Marston’s, which operates 1,339 pubs in the UK with about 11,000 employees, said it expects a 4 million pound impact due to wage inflation and another 4.6 million pounds from additional employment costs in fiscal 2025, but called the costs “manageable.

Loungers, a cafe-bar and restaurant chain with over 8,000 staff, said the combined impact of NIC and minimum wage increase will add 9 million pounds to its annual costs.

HOMEBUILDERS

Persimmon expects costs from a hike in national insurance to be about 5 million pounds over the next year.

Vistry also estimated a 5-million-pound impact in fiscal year 2025 from the increase in employer NIC.

OUTSOURCERS

Serco Group 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 expects NIC-related costs to be about 60 million pounds, but the company estimates that it would be able to recover 35 million pounds of those costs through contractual recoveries and commercial negotiations in fiscal 2026.

Contract caterer Compass Group, which employs about 50,000 staff in its UK and Ireland unit, expects NIC-related costs to be in the “tens of millions.

SERVICE PROVIDERS

Office services provider Restore Plc 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, 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 Tracsis 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 said it expects an annual cost impact of about 2 million pounds in fiscal 2026 due to the NIC increase.

Business recovery and property services consultancy Begbies Traynor estimates the NIC changes to increase employment costs by about 1.25 million pounds per annum.

British legal and professional services group Gateley said it was expecting the NIC changes to impact its costs by about 1.8 million pounds in fiscal 2026.

Equipment rental specialist VP Plc said it estimated the NIC and wage hikes would cost the group about 4 million pounds in the next financial year.

Specialist property services provider Kinovo said it expected a cost of impact of about 500,000 pounds from the NIC and wage increase.

CHEMICALS

British chemicals maker Johnson Matthey said the impact of the increase in UK employers’ NIC on the group would be in about the mid-single digit millions.

MANUFACTURER

Genuit Group expects the NIC and minimum wage hikes to add nearly 5 million pounds to its cost base in 2025.

Structural steel company Severfield said it estimates the NIC hike to increase costs by 2 million pounds per annum starting fiscal 2026.

Convenience food manufacturer Greencore flagged an impact of about 7.5 million pounds in fiscal 2025 due to the increase in national insurance charges.

Packaging firm Macfarlane Group said it expected its annualised costs to increase by around 1.5 million pounds from the NIC and wage hikes, starting April 2025.

IG Design Group, the world’s largest maker of celebration products including gift wrap, greeting cards and gift bags, said it estimated the NIC and wage increases to cost the firm about 0.7 million pounds in annual operating costs from the next financial year.

MEDIA FIRM

Media production firm Zinc Media expects the NIC changes to increase its cost base by about 400,000 pounds annually.

(Source: Company announcements, Reuters reporting)

($1 = 0.7863 pounds)

(Reporting by Prerna Bedi, DhanushVignesh Babu, Yadarisa Shabong and Yamini Kalia in Bengaluru; Editing by Shilpi Majumdar, Shinjini Ganguli, Shounak Dasgupta, Anil D’Silva and Maju Samuel)