A HOST of pub chains have warned of price rises ahead of a major tax rise.
The Government is hiking employer National Insurance contributions (NICs) from tomorrow as part of plans to raise £25billion.
AlamyEmployer NICs are rising from tomorrow[/caption]Businesses will have to pay employer NICs on workers’ wages at a rate of 15%, up from 13.8%.
Meanwhile, the threshold at which they have to be paid is being lowered from £9,100 to £5,000.
The changes to the tax system were confirmed by the Government during the Autumn Budget last October.
The Chancellor Rachel Reeves insisted the tax hike would protect workers as per Labour’s manifesto.
But the Institute for Fiscal Studies warned it would ultimately be felt by staff in reduced wage rises.
Not only this, but a host of businesses have warned they will have to raise prices in order to cover the tax hike.
The British Beer and Pub Association, which represents the industry, said the average cost of a pint will rise from around £4.80 to £5.01, in part due to the hike in employer NICs.
Meanwhile, a host of pub chains have warned they will have to hike up prices at pumps to cover the increase in NICs.
This is a list of some of the pub chains who have cautioned of price rises, or who have already hiked prices:
Young’s – up to 20p on pints Mitchells and Butlers – up to 15p on pints Fuller’s – 10p on pints Wetherspoons Shepherd Neame Marston’s – 10p on pintsRETAILERS CAUTION OF PRICE RISES
It’s not just pub chains warning of price rises due to the upcoming Government tax raid.
The British Retail Consortium (BRC) said food prices will rise by 4.2% in the later part of this year.
Bakery chain Greggs has already hiked its sausage rolls – up from £1.25 to £1.30.
Meanwhile, dozens of chief financial officers surveyed by the BRC said they would have to raise prices in response to higher NICs.
Around 24 of the 52 surveyed said they would look at reducing staff numbers too.
The boss of M&S said the retailer would have to pass on extra costs due to the National Insurance and minimum wage hikes.
Stuart Machin said any price rises would be “small and behind the market”.
High street fashion giant Next also warned that its costs will increase by £67million, some of which it will be forced to pass on to shoppers.
The retailer said it will need to push through an “unwelcome” 1% rise in prices because of the increase in employer National Insurance contributions.
The boss of Currys said last December price rises would be “inevitable” as it faced a £32million bill due to the Autumn Budget.
Meanwhile, DIY specialist Halfords warned it may be forced to push up prices at its repair garages due to a £23million wage bill.
Royal Mail and Primark have also said shoppers will pay more as a result of the tax increase.
What are employer National Insurance contributions (NICs)?
CONSUMER reporter Sam Walker tells you everything you need to know.
Employer National Insurance Contributions (NICs) are effectively a tax on businesses used to cover social security benefits like Universal Credit and the state pension.
NICs are also paid by workers and the self-employed.
According to the Institute for Fiscal Studies (IFS), NICs are the UK’s second-biggest tax, expected to bring in around £170billion this financial year.
Employers only pay NICs on workers’ salaries from a certain threshold. This is currently £9,100 but will drop to £5,000 from April 6.
Those of state pension age or older do not have to pay NICs, but employers with workers aged 66 or older have to pay NICs on their earnings.
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