Cliff Nicholls manages two trampoline parks and indoor play centers: one in Tamworth in the West Midlands, the other in Bolton, Greater Manchester. He already feels pressure from the latest government’s budgetary measures and has been forced to abandon other investment plans.
“The national increases in the minimum wage to come in April, combined with reduced thresholds for national insurance and the increase in the national insurance rate of employers, will have a very significant impact,” said Cliff.
To reduce costs, it has already made drastic changes. “We had to make fairly radical decisions, reducing our opening hours, making a redundant high-level member due to the rise in corporate costs, including commercial prices and national insurance,” -It added.
Cliff Nicholls
While policies such as the increase in Living National Salary (NLW) are designed to support unpaid workers, other changes could compensate for these advantages.
A major change is the reduction of the salary threshold to which companies are starting to pay the national insurance contributions (NIC) of the employer.
Currently, employers are starting to pay the NICS when an employee earns more than £ 9,100 per year. From April 2025, this threshold will drop at £ 5,000. At the same time, the rate or the employer will drop from 13.8% to 15%.
Scroll down to see Cliff staff finances
As part of the new system, an employer will pay nearly £ 800 more in nicks per year for an employee earning around £ 23,800 (on the basis of a week of 37.5 hours at the new NLW).
The increase in nicks will be proportionally higher for less well paid workers’ employers. For example, they will pay about 7% for a person earning £ 9,000 per year and 3% for an employee on the NLW. But for someone who earns £ 75,000 per year, employers will pay 2% more.
Prolonged employment rights and commercial prices add pressure
The work has also announced a series of employment rights reforms to improve working conditions. These include the extension of the remuneration of statutory patients to less well -remunerated employees who were not previously eligible and to make it available from the first day of illness for all workers.
The changes would also allow employees to claim unpaid parental leave of their first day in a job, strengthen protections against unfair dismissal and improve the rights of people on zero hour contracts.
The government believes that these changes in employment will cost companies around 5 billion pounds sterling.
Nye Cominetti, principal economist of the Resolution Foundation, said: “What concerns me is that the national insurance of the employer increases, as the changes in minimum wages and employment rights, an impact of disproportionate way to low -paid workers.
“For example, the extension of statutory remuneration of illness to those who previously inadmissible, add costs for employers who are already confronted with higher NICS and the rise in wages. In this context, it would have been more judicious to increase tax revenue in a way that has not struck workers little paid. »»
Cliff must abandon expansion plans due to budgetary changes
But for Cliff, changes in business rates are an even greater challenge. Budget changes will mean that commercial prices will drop from 75% to 45% for retail, leisure and hotel companies, considerably increasing its costs.
“Changes in commercial prices probably have a greater impact on us than national insurance,” he said.
“One of our buildings was in a retail park at the cutting edge 25 years ago. The rental value has dropped considerably since the commercial prices have not followed the pace. Next year, we will pay between £ 55,000 and £ 60,000 fairer in commercial prices. »»
Cliff is not alone in his concerns.
Research by the Federation of Small Businesses have revealed that in the last three months of last year, confidence between small businesses fell to its lowest level in a decade, excluding the pandemic.
Do these changes have an impact on inflation?
Higher prices for food, goods and services will also pressure workers.
New data from the National Statistics Office show that inflation increased to 3% in January 2025, the highest level in 10 months.
Many companies had warned that this would happen, saying that the increase in national insurance costs and the increase in NLW would leave them other choice than to increase prices.
The latest quarterly economic survey of the British chambers of commerce, conducted after the budget, questioned more than 4,800 companies. He found that more than half expect to increase prices over the next three months, compared to 39% in the third quarter of 2024.
Companies make difficult decisions
Signs of pressure already emerge.
Lord Wolfson, a conservative and managing director of Next, warned that it would become more difficult for people to enter the labor market.
In an interview with the BBC, he declared that the increase in NAVS for companies would particularly reach the retail sector, with the most affected entry -level jobs.
He urged the government to consider tax changes rather than implementing them entirely in April, warning that if not, companies would be forced to reduce jobs or reduce working hours.
Although it is not possible to fully attribute this to budgetary announcements, the first data suggest that the workforce has shrunk in various industries since October 2024, with the largest decreases in the sectors that use a large Number of paid workers, such as manufacturing, retail and hospitality.
Since the budget, the number of employee employees has dropped more than 10,000 in manufacturing and nearly 9,000 hospitals.
Since the budget, voluntary liquidations have remained regularly high and from December 2024 to January 2025, closings of volunteer companies increased by 9%.
Although this cannot only be attributed to future budgetary measures, this highlights the challenges that companies face and the difficult decisions they take accordingly.
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A spokesperson for HM Treasury said: “We have delivered a single budget to erase the slate and deliver the stability that companies must invest and develop, while protecting the shifts from higher tax workers, guaranteeing more Half of the employers, either see a reduction or no change in their national insurance bills and offer a record boost for millions of workers.
“Now we are going further and faster to launch economic growth and increase the standard of living, with a majority of confident business leaders that Chancellor’s plans will help stimulate business investment.
“This includes support for businesses to create wealth through Great Britain by causing corporate tax, by making permanent expenses and permanently commercial prices for retail, hospitality and hospitality and hospitals leisure on the main street of next year. ”
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