British Pubs, Restaurants, And Hospitality Firms Brace For Rise In NICs: What It Means For The Sector

As we head into April 2025, businesses in the UK, especially within the hospitality sector, are facing significant changes that could impact their bottom line. One of the key changes is the rise in National Insurance Contributions (NICs), set to come into effect on 6 April 2025, which is expected to increase costs for businesses already under pressure.

For the hospitality industry, which relies heavily on low-paid workers, temporary staff, and seasonal employees, these changes could be particularly hard-hitting. From next weekend, businesses will be hit with a combined £25bn rise in NICs, with the rate for employer NICs rising from 13.8% to 15%, and the threshold for the tax being levied slashed from £9,100 to £5,000. This will impact nearly 1 million businesses across the UK, including bars, pubs, restaurants, care providers, and retailers.

The Impact on the Hospitality Industry For businesses like pubs and restaurants, this rise in NICs comes at a time when many are already struggling to balance costs, pay increases, and recruitment. Kate Nicholls, CEO of UKHospitality, has described this tax change as "the most regressive" in 30 years within the industry. She emphasised that while the government talks about making tough choices, businesses are the ones that will ultimately bear the brunt of these changes.

Alongside the NIC increase, a 6.7% rise in the National Living Wage means that businesses will face higher operational costs, which could lead to redundancies, frozen hiring, or price hikes that might further strain customers. As Mike Gavin of Arc Hospitality Recruitment notes, his business is expecting an effective doubling of their employer NICs, and as a result, some businesses are already moving offices or negotiating cost splits with clients to absorb the added burden.

A Ripple Effect Across the Sector The financial impact of these tax changes will affect businesses of all sizes. Smaller businesses, which rely on temporary or part-time staff, will find it harder to absorb these increased costs, potentially leading to reduced hiring or hiring freezes. This may also result in higher prices for customers, further adding to inflationary pressures.

Will Technology Help or Hinder? Some experts believe these changes could push businesses towards investing in technology to offset the rising costs of low-paid, unskilled labour. Companies like Greggs and Next have already hinted that they might explore more mechanisation in their warehouses and shops to reduce reliance on human labour. This shift to technology may allow some businesses to weather the storm, but it could also leave workers behind, especially those in lower-skilled roles.

However, others argue that these policies could contribute to the long-term stability of the UK workforce by pushing for better wages and more secure employment, which could have a positive effect on consumer spending and economic growth.

Here at AGS Group, we understand how stressful these changes can be, especially for businesses in the hospitality and retail sectors. With so many variables to manage—from rising costs to staffing concerns—we don’t want Facilities Management (FM) to add to your stress.

Let us handle your FM needs so you can focus on navigating the complexities of the evolving business landscape. Our expert team is here to ensure your facilities are running smoothly, without adding extra pressure to your team.

Find out more about how AGS Group can help you streamline your FM and reduce stress during these challenging times:🌐 agsgroupuk.org 📞 0330 094 9330