Britain’s four biggest supermarkets could see their collective tax bill rise by close to £500m after Rachel Reeves augmented her raid on employers’ national insurance contributions (NICs) with bigger-than-expected changes to the threshold at which companies start paying it.
Sky News understands that Asda, J Sainsbury, Tesco and Wm Morrison could now face the much-higher tax burden because of the large number of part-time workers they employ who earn over £5,000 – the new floor for triggering contributions.
An executive at one of the quartet said their immediate calculation was that they would have to pay “between double and treble” the additional sums they had modelled following pre-Budget reports in the media that the chancellor was preparing to increase the employer NICs rate by two percentage points.
Ms Reeves said in her budget statement on Wednesday that while the rate would increase by only 1.2 percentage points – from 13.8% to 15% – the threshold for payments would fall from £9,100 to £5000.
One supermarket insider said it would bring thousands of people across the sector within the ambit of employer NICs because of the sector’s prolific employment of part-time staff who earn between the old and new thresholds.
The additional tax burden for the big four players will be bearable because of the scale of the industry’s collective multibillion pound annual profits.
Nevertheless, allied to the sharp increase announced by Labour to the national living wage this week, it will leave the supermarket sector feeling among the hardest-hit by Ms Reeves’ maiden Budget.
The new threshold for triggering contributions is £5,000
In an article for The Times last week, Stuart Machin, chief executive of Marks & Spencer, urged the chancellor not to increase taxes, calling them “a short-term, easy fix”.
In total, she has said she wants to raise £25bn annually from the raid on employer NICs.
Fears among senior bankers of further taxes on their sector proved to be misplaced, while pre-Budget speculation about the scale of tax hikes on the carried interest used to reward private equity executives proved to be misplaced.
None of the supermarkets contacted by Sky News would comment on Wednesday.