UK firms flag over $1 billion in costs from increase in national insurance, wages
Adds details on Mitie's cost estimates
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 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.
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
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