Following adjustments made in last week’s Budget, M&S is looking for new ways to cut costs in order to pay the additional US $ 77.43 million that has been thrown onto its National Insurance bill. Instead of boosting costs for customers, the company intends to find savings to cover this extra expense, according to CEO Stuart Machin.
“We don’t want to charge our customers for these expenses,” he emphasised, “We want to stay where we are.”
Although M&S had expected some effects from the changes to National Insurance, Machin clarified that the “double whammy” of higher rates and a reduction in the pay threshold at which employers begin to pay the tax has put further strain on the company. The extra US $ 77.43 million is on top of the US $ 139.37 million M&S paid in national insurance last year.
In an effort to preserve its reputation for value, Machin stated that he was careful not to raise prices in order to pass these expenses on to customers. He also highlighted that the fashion group ‘cannot rule anything out’ given the current circumstances.
As a result of the decision to increase national insurance employer contributions, Primark is similarly bracing for a sharp increase in operating expenses. According to reports, George Weston, CEO of Associated British Foods, the company that owns Primark, warned that the increases will have a significant impact on the British high street and raise its own bill by ‘tens of millions’. The threshold adjustment will “impact high street city centre businesses more than many others,” according to Weston.
Chancellor Rachel Reeves declared that the NI will rise from 13.8 per cent to 15 per cent , and that businesses will have to pay their employees’ contribution based on the increase from April 2025. In addition to this, the threshold at which employers begin paying national insurance on employees’ earnings has also been reduced from US $ 11,375 to US $ 6,250 US Dollars.