Warnings rise in costs could risk hospitality jobs in Manchester
UK businesses face a multibillion-pound wave of higher costs as higher wages and tax increases come into force today
Last updated 1st Apr 2025
Businesses are warning that a wave of higher costs this week could lead to job losses in Greater Manchester.
Retail and hospitality bosses have warned that higher labour costs and taxes are set to push up prices for customers across the UK.
A raft of measures linked to the Labour Government's first budget will come into force today (Tuesday April 1), including a rise in the national minimum wage and higher property tax payments.
This will be followed by changes to national insurance contribution (NICs) payments from Saturday April 6.
Mark Wrigley owns Atlas Bar in Deansgate, he says even despite already paying staff above the minimum, the other rising costs may set them back tens of thousands of pounds: "Thousands and thousands of businesses like ours are going to be massively impacted.
"The employer national insurance has dragged everybody in. A massive extra cost and we're looking at having to find an extra fifty grand a year to cover this extra cost.
"We don't have money trees they money has to come from somewhere.
"So basically the government is pretty much wiping out the profitability of this business in one go with the rate-able value situation and reducing the support on that even though they're acknowledging its unfair."
Mark added that they've had to reduce staff numbers and shelved plans to expand the business to try and save as much money as possible.
Millions of UK workers will benefit from a rise in the national minimum wage to £12.21 an hour on Tuesday, representing an increase of 77p.
The move has forced many of the UK's largest employers to increase their rates of pay, with supermarket groups Tesco and Sainsbury's among firms to announce they would hike their basic pay above the new minimum.
The rise in wages will come into force at the same time as businesses swallow a raft of tax changes, many of which they had not expected prior to the autumn budget.
One of the most significant of these will be an increase in business rates for many high street firms due to a reduction in current discounts for more than 250,000 retail, hospitality and leisure firms.
These businesses currently receive a 60% discount on their business rates - the property tax on commercial businesses - bills up to a cap of £110,000.
However, this discount will be reduced to 25% from April 1.
The drop in the discount means that the average small shop will now see its business rates spiral from £3,589 to £8,613, according to analysis from global tax firm Ryan.
Its research also showed that the overall business rates bill for firms in England will rise by £1.5 billion for the year as a result of the change.
Pub, retail and leisure bosses have called for an overhaul of the business rates regime in the Government's next budget.
Alex Probyn, practice leader of property tax at Ryan, said the rises "will disproportionately affect small and independent businesses across sectors already struggling, whilst medium to large-sized businesses across all sectors of the economy tell us the standard rate of tax is now a disincentive to invest and is anti-growth."
From Tuesday, supermarkets, food producers and online retailers will also be hit by a new plastic packaging tax.
Retailers will be liable to pay a charge, based on weight, for every item of packaging they use in the products that they sell.
The Food and Drink Federation has warned that the tax, which could raise up to £2 billion, is likely to lead to higher prices for consumers.
Businesses will face further pressure from higher taxes from Saturday April 6, when changes to NICs come into force.
In October, Chancellor Rachel Reeves announced that the rate of employer NICs will increase from 13.8% to 15% in April.
At the same time, firms will also pay more because the Government lowered the threshold at which companies would start paying NICs from £9,100 to £5,000.
Changes to NICs are expected to allow the Government to raise a further £25 billion each year.
HM Treasury spokesperson said:
“We are a pro-business government, and we know the vital importance of small businesses to our economy and have already achieved a great deal in a short period of time, including protecting the smallest businesses from the employer National Insurance rise and late payments, protecting 250,000 retail, hospitality and leisure business properties from paying full business rates and capping corporation tax.
“We delivered a once-in-a-Parliament budget that took necessary decisions on tax to stabilise the public finances, including the NHS which has now seen waiting lists fall five months in a row.
“We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets."