Tesco is facing a staggering £1bn increase in National Insurance costs following Labour’s Autumn budget, as pressure mounts on Chancellor Rachel Reeves to reconsider the tax hike.
The supermarket giant, with 300,000 UK staff, will see its costs soar after Employer National Insurance contributions were raised by 1.2 percentage points.
The changes are part of Labour’s plans to raise £25bn, marking one of Britain’s biggest single tax-raising measures in history.
From next April, employers will face a national insurance rate of 15 per cent on salaries above £5,000, up from the current 13.8 per cent on salaries above £9,100.
The structural change to the threshold is particularly concerning for businesses, as it brings more low-paid and part-time workers into the scope of employer contributions.
For Tesco, this translates to an estimated £250million annual rise in its National Insurance bill, according to analysis from Morgan Stanley.
Around 200 business leaders have called on Rachel Reeves to water down the tax increase.
They have detailed “grave fears” about the impact on their sector, which faces nearly £14bn in extra costs during this parliament.
The industry calculates it would need to raise prices by up to eight per cent to offset the higher costs.
Tim Martin, Wetherspoon boss said “all hospitality businesses” are planning to pass on higher costs through price rises.
Chris Jowsey, chief executive of Admiral Taverns, which operates over 1,420 pubs, warned the measures will cost the sector “significantly”.
The letter’s signatories include leaders from Mitchells & Butlers, Whitbread, and Greene King, who warn they may need to reconsider investment and cut jobs if unable to pass on costs.
The impact extends across the supermarket sector, with Sainsbury’s, Asda and Morrisons facing a combined £1.3 billion in additional costs over this parliament.
Lord Rose of Monewden, Asda’s chairman, warned the change would “hit business hard and would be inflationary to a degree.”
Sainsbury’s chief executive Simon Roberts cautioned that the budget would lead to higher food prices.
The Co-op joined the chorus of concerns on Saturday, revealing its 55,000 employees would cost the company tens of millions more annually.
A Treasury spokesman said difficult choices had to be made to restore economic stability.
They said: “More than half of employers will either see a cut or no change in their national insurance bills, and to support the hospitality industry we’re permanently cutting business rates for every shop on the high street from 2026 alongside a 40 per cent relief on business rates bills next year for thousands of premises.
The Conservatives have criticised Labour for failing to publish a tax impact assessment alongside the national insurance rise.
Shadow Chancellor Mel Stride said: “It is unacceptable that Labour are withholding this critical analysis.”
The Government plans to implement an overhaul of the business rates system in 2026/27.