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| National Insurance: Lush and Kwik Fit say rise will push prices higher | National Insurance: Lush and Kwik Fit say rise will push prices higher |
| (about 4 hours later) | |
| Cosmetics company Lush and car repair chain Kwik Fit are among firms which have warned they will raise prices due to an increase in employers' National Insurance (NI). | Cosmetics company Lush and car repair chain Kwik Fit are among firms which have warned they will raise prices due to an increase in employers' National Insurance (NI). |
| Other firms have told the BBC they will reduce how much profit they make, freeze hiring or in some cases cut jobs to cover the higher costs. | Other firms have told the BBC they will reduce how much profit they make, freeze hiring or in some cases cut jobs to cover the higher costs. |
| From Sunday, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently. | From Sunday, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently. |
| The Treasury said the billions raised will be spent on public services, including the NHS. | The Treasury said the billions raised will be spent on public services, including the NHS. |
| Lush's Kasey Swithenbank said the company would be looking at "small incremental price changes" | Lush's Kasey Swithenbank said the company would be looking at "small incremental price changes" |
| Lush told the BBC that with 3,600 employees in the UK and Ireland, it would have to find an extra £2.7m per year. | Lush told the BBC that with 3,600 employees in the UK and Ireland, it would have to find an extra £2.7m per year. |
| Kasey Swithenbank, Lush's retail head for the UK and Ireland, said: "We are going to be taking small incremental price changes. | Kasey Swithenbank, Lush's retail head for the UK and Ireland, said: "We are going to be taking small incremental price changes. |
| "We are taking an approach where we look at certain categories at key points of the year so hopefully our customers don't feel the full burden straight away." | "We are taking an approach where we look at certain categories at key points of the year so hopefully our customers don't feel the full burden straight away." |
| Kwik Fit boss Mark Slade says the National Insurance changes will affect prices and hiring. | Kwik Fit boss Mark Slade says the National Insurance changes will affect prices and hiring. |
| Kwik Fit, which employs about 5,000 people, estimates the NICs rises will cost it £5m. | |
| This will have a knock-on effect on prices, and recruitment, said Mark Slade, its managing director. | This will have a knock-on effect on prices, and recruitment, said Mark Slade, its managing director. |
| "We are really careful to make sure KwikFit is always competitive and benchmarked against the people around us - but the reality is that includes increasing prices." | "We are really careful to make sure KwikFit is always competitive and benchmarked against the people around us - but the reality is that includes increasing prices." |
| He added: "There will be some people who aren't replaced over the coming year and that will be in the senior levels." | He added: "There will be some people who aren't replaced over the coming year and that will be in the senior levels." |
| What are the changes? | What are the changes? |
| The rate that employers pay in contributions will rise from 13.8% to 15% on a worker's earnings above £175 per week. The government expects about 940,000 firms to pay more, 250,000 companies to pay less, and 820,000 to see no change. | The rate that employers pay in contributions will rise from 13.8% to 15% on a worker's earnings above £175 per week. The government expects about 940,000 firms to pay more, 250,000 companies to pay less, and 820,000 to see no change. |
| The threshold when employers start paying the tax on each employee's salary will be reduced from £9,100 per year to £5,000. | The threshold when employers start paying the tax on each employee's salary will be reduced from £9,100 per year to £5,000. |
| But Employers Allowance - the amount employers can claim back from their National Insurance bill - has been raised from £5,000 to £10,500. | But Employers Allowance - the amount employers can claim back from their National Insurance bill - has been raised from £5,000 to £10,500. |
| BBC Breakfast contacted around 200 UK businesses and charities in March, across different industries, from sole traders to large companies to get a sense of the impact of the increase in employer National Insurance Contributions. | BBC Breakfast contacted around 200 UK businesses and charities in March, across different industries, from sole traders to large companies to get a sense of the impact of the increase in employer National Insurance Contributions. |
| Some 121 completed the questionnaire and around 100 of these businesses told us they had at least an approximate idea of how much increases in employer NICSs would cost them. | Some 121 completed the questionnaire and around 100 of these businesses told us they had at least an approximate idea of how much increases in employer NICSs would cost them. |
| The costs ranged from £1,000 to £39m depending the size of the business and the number of employees. | The costs ranged from £1,000 to £39m depending the size of the business and the number of employees. |
| Around 60 of the businesses which were planning to increase the staff count before announcement said the Budget had affected these plans. | Around 60 of the businesses which were planning to increase the staff count before announcement said the Budget had affected these plans. |
| How will firms manage the rises? | How will firms manage the rises? |
| BBC Breakfast's questionnaire asked employers to choose from a list of actions they would take to manage increases in NICs. | BBC Breakfast's questionnaire asked employers to choose from a list of actions they would take to manage increases in NICs. |
| 77 said they would pass on costs to customers in price rises | 77 said they would pass on costs to customers in price rises |
| 68 said they would freeze or reduce hiring | 68 said they would freeze or reduce hiring |
| 81 said they would reduce their profit margins | 81 said they would reduce their profit margins |
| 39 said they would manage increases through job losses | 39 said they would manage increases through job losses |
| Businesses most frequently told us they would choose a combination of these things. | Businesses most frequently told us they would choose a combination of these things. |
| BT boss Allison Kirkby said tax changes meant BT was speeding up cost cutting it was going to do anyway | BT boss Allison Kirkby said tax changes meant BT was speeding up cost cutting it was going to do anyway |
| Allison Kirkby, chief executive of BT, said the tax changes, which will cost the firm £100m, will mean it speeds up job cuts it was already planning. | Allison Kirkby, chief executive of BT, said the tax changes, which will cost the firm £100m, will mean it speeds up job cuts it was already planning. |
| She added that BT is "delighted" with tax relief on infrastructure investment in the Spring Statement and UK planning reforms. | She added that BT is "delighted" with tax relief on infrastructure investment in the Spring Statement and UK planning reforms. |
| "At the moment, like the country, we are focused on getting BT back to growth," she said. | "At the moment, like the country, we are focused on getting BT back to growth," she said. |
| "Predictability on taxation, on regulation and on planning is super helpful for the investment that goes into infrastructure like ours, which is the digital backbone of the country." | "Predictability on taxation, on regulation and on planning is super helpful for the investment that goes into infrastructure like ours, which is the digital backbone of the country." |
| Angela Burns says the tax changes are "really challenging". | Angela Burns says the tax changes are "really challenging". |
| Angela Burns is the chief executive of the Webb Hotel Group, a group of four hotels based in Sutton Coldfield in the West Midlands. | Angela Burns is the chief executive of the Webb Hotel Group, a group of four hotels based in Sutton Coldfield in the West Midlands. |
| It employs just under 300 people, and she says the NICs rises alone will cost £200,000 a year, with additional minimum wage and pension costs taking that to £600,000. | It employs just under 300 people, and she says the NICs rises alone will cost £200,000 a year, with additional minimum wage and pension costs taking that to £600,000. |
| "It's really tough because our labour force is the main expense in our business," she said. | "It's really tough because our labour force is the main expense in our business," she said. |
| "As soon as it was announced in the budget in October, we started to look at restructuring, and as people have left, we haven't re-employed. So we've actually cut our workforce down from about 320 to about 280 now to prepare ourselves." | "As soon as it was announced in the budget in October, we started to look at restructuring, and as people have left, we haven't re-employed. So we've actually cut our workforce down from about 320 to about 280 now to prepare ourselves." |
| She said prices would have to be moved "slightly upwards". | She said prices would have to be moved "slightly upwards". |
| "But it's a balancing act as to what customers are prepared to pay," she added. | "But it's a balancing act as to what customers are prepared to pay," she added. |
| Greg Strickland, general manager of trampoline activity firm Jump Xtreme in Bolton, said the changes added £30,000 of costs "overnight". | Greg Strickland, general manager of trampoline activity firm Jump Xtreme in Bolton, said the changes added £30,000 of costs "overnight". |
| He said it had cut 16 hours per week off some 40-hour contracts to cover the cost. | He said it had cut 16 hours per week off some 40-hour contracts to cover the cost. |
| Meanwhile Andrew Lane, managing director of Union Industries in Leeds said the firm, which makes industrial doors, shares about half its post-tax profit with employees. | Meanwhile Andrew Lane, managing director of Union Industries in Leeds said the firm, which makes industrial doors, shares about half its post-tax profit with employees. |
| "This is going to hit them," he said. "There will be less money to distribute to our employee-owners." | "This is going to hit them," he said. "There will be less money to distribute to our employee-owners." |
| The government has predicted the changes will raise between £14.6bn and £18.3bn a year over five years when compensation for public sector employers is taken into account. | The government has predicted the changes will raise between £14.6bn and £18.3bn a year over five years when compensation for public sector employers is taken into account. |
| A Treasury spokesperson told the BBC the government was "pro-business" and that it knew the "vital importance of small businesses to our economy". | A Treasury spokesperson told the BBC the government was "pro-business" and that it knew the "vital importance of small businesses to our economy". |
| They said October's budget "took difficult decisions on tax to stabilise the public finances, including the NHS which has now seen waiting lists fall five months in a row". | They said October's budget "took difficult decisions on tax to stabilise the public finances, including the NHS which has now seen waiting lists fall five months in a row". |
| They added: "We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets." | They added: "We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets." |
| Additional reporting by Oliver Smith & Jennifer Meierhans | Additional reporting by Oliver Smith & Jennifer Meierhans |
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