Low-paid jobs at risk from Labour’s tax increases on businesses

Published

3 months ago

February 22, 2025

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Cliff Nicholls runs two trampoline parks and indoor play centres: one in Tamworth in the West Midlands, the other in Bolton, Greater Manchester. He’s already feeling the pressure from the government’s latest budget measures and has been forced to abandon further investment plans.

“The national minimum wage increases coming in April, combined with the reduced thresholds for national insurance and the increased rate of employers’ national insurance, will have a very significant impact,” Cliff said.

To cut costs, he’s already made drastic changes. “We’ve had to take some fairly radical decisions, reducing our opening hours, making a senior staff member redundant because of rising business costs, including business rates and national insurance,” he added.

While policies like the National Living Wage (NLW) increase are designed to support low-paid workers, other changes could offset these benefits.

One major shift is the reduction in the salary threshold at which businesses start paying employer’s national insurance contributions (NICs).

Currently, employers begin paying NICs when an employee earns more than £9,100 per year. From April 2025, this threshold will drop to £5,000. At the same time, the employer’s NI rate will rise from 13.8% to 15%.

Scroll through to see Cliff’s staffing finances

Under the new system, an employer will be paying nearly £800 more in NICs annually for an employee earning around £23,800 (based on a 37.5-hour week at the new NLW).

The rise in NICs will be proportionally higher for employers of lower-paid workers. For example, they will pay around 7% for someone earning £9,000 a year and 3% for an employee on the NLW. But for someone earning £75,000 a year, employers will pay 2% more.

Extended employment rights and business rates add pressure

Labour also announced a series of employment rights reforms aimed at improving working conditions. These include extending statutory sick pay to lower-paid employees who were previously ineligible and making it available from the first day of illness for all workers.

The changes would also enable employees to claim unpaid parental leave from their first day in a job, strengthen protections against unfair dismissal, and enhance rights for those on zero-hours contracts.

The government estimates that these employment rights changes will cost businesses around £5bn.

Nye Cominetti, principal economist at the Resolution Foundation, said: “What concerns me is that employer national insurance increases, like the minimum wage and employment rights changes, disproportionately impact low-paid workers.

“For instance, extending statutory sick pay to those previously ineligible adds costs for employers already facing higher NICs and rising wages. In this context, it would have been more sensible to raise tax revenue in a way that didn’t hit low-paid workers the hardest.”

But for Cliff, the changes to business rates relief are an even bigger challenge. Budget changes will mean business rates relief will drop from 75% to 45% for retail, leisure, and hospitality businesses, significantly increasing his costs.

“The business rates changes probably have a bigger impact on us than national insurance,” he explained.

“One of our buildings used to be in a prime edge-of-town retail park 25 years ago. The rental value has dropped significantly since but business rates haven’t kept pace. Next year, we’ll be paying between £55,000 and £60,000 more just in business rates.”

Cliff is not alone in his concerns.

Research conducted by the Federation of Small Businesses found that in the final three months of last year, confidence among small firms fell to its lowest level in a decade, excluding the pandemic.

Are these changes impacting inflation?

Higher prices for food, goods, and services will also put pressure on working people.

New data from the Office for National Statistics shows that inflation rose to 3% in January 2025, the highest level in 10 months.

Many businesses had warned this would happen, saying that rising national insurance costs and the increase in the NLW would leave them with no choice but to raise prices.

The latest Quarterly Economic Survey by the British Chambers of Commerce, conducted after the budget, surveyed more than 4,800 businesses. It found that more than half expect to increase prices in the next three months, up from 39% in the third quarter of 2024.

Businesses are making tough decisions

Signs of pressure are already emerging.

Lord Wolfson, a Conservative peer and chief executive of Next, has warned that it will become harder for people to enter the workforce.

In an interview with the BBC, he said that the rise in NICs for businesses would hit the retail sector particularly hard, with entry-level jobs most affected.

He urged the government to phase in the tax changes rather than implement them in full in April, warning that otherwise, businesses would be forced to cut jobs or reduce working hours.

While it is not possible to fully attribute this to budget announcements, early data suggests that the workforce has been shrinking across various industries since October 2024, with the biggest declines in sectors that employ large numbers of lower-paid workers, such as manufacturing, retail, and hospitality.

Since the budget, the number of payrolled employees has fallen by more than 10,000 in manufacturing and nearly 9,000 in hospitality.

Since the budget, voluntary liquidations have remained consistently high and from December 2024 to January 2025 voluntary business closures have gone up by 9%.

While this can’t be solely attributed to upcoming budget measures, it does highlight the challenges businesses are facing and the difficult decisions they are making as a result.

An HM Treasury spokesperson said: “We delivered a once-in-a-parliament budget to wipe the slate clean and deliver the stability businesses need to invest and grow, while protecting working people’s payslips from higher taxes, ensuring more than half of employers either see a cut or no change in their National Insurance bills, and delivering a record pay boost for millions of workers.

“Now we are going further and faster to kickstart economic growth and raise living standards, with a majority of business leaders confident that the chancellor’s plans will help drive business investment.

“This includes backing businesses to create wealth across Britain by capping corporation tax, making full expensing permanent and permanently cutting business rates for retail, hospitality, and leisure businesses on the high street from next year.”

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Business

Superstar Adele joins backers of music royalties platform Audoo

Published

1 hour ago

May 16, 2025

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Superstar Adele joins backers of music royalties platform Audoo

Adele, the Grammy award-winning artist, has joined the list of music superstars investing in Audoo, a music technology company which helps artists to receive fairer royalty payments.

Sky News has learnt that the British musician and Adam Clayton, the U2 bassist, have injected money into Audoo as part of a £7m funding round.

The pair join Sir Elton John, Sir Paul McCartney and ABBA’s Bjorn Ulvaeus as shareholders in the company.

Changes to Audoo’s share register were filed at Companies House in recent days.

Audoo, which was established by former musician Ryan Edwards, is trying to address the perennial issue of public performance royalties, in order to ensure musicians are rewarded when their work is played in public venues.

Mr Edwards is reported to have been motivated to set up the company after hearing his own music played at football stadia and in bars, without any payment for it.

Estimates suggest that artists lose out on billions of dollars of unaccounted royalties each year.

London-based Audoo uses a monitoring device – which it calls an Audio Meter – to recognise songs played in public venues, and which is said to have a 99% success rate.

It has struck what it describes as industry-first partnerships with organisations including the music licensing company PPL/PRS to track and report songs played in public performance locations such as cafes, hair salons, shops and gyms.

“At Audoo, we’re incredibly proud of the continued support we’re receiving as we work to make music royalties fairer and more transparent for artists and rights-holders around the world through our pioneering technology,” Mr Edwards told Sky News in a statement on Friday.

“We have successfully reached £7m in our latest funding round.

“This funding marks a pivotal moment for Audoo as we focus on our growth in North America and across Europe, bringing us closer to our mission of revolutionising the global royalty landscape.”

Sources said the new capital would be used partly to finance Audoo’s growth in the US.

The latest funding round takes the total amount of money raised by the company since its launch to more than $30m.

Mr Edwards has spoken of his desire to establish a major presence in Europe and the US because of their status as the world’s biggest recorded music markets.

Adele’s management company did not respond to an enquiry from Sky News.

Business

The Sunday Times Rich List: Billionaires fall as King rises to match Rishi Sunak

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1 hour ago

May 16, 2025

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The Sunday Times Rich List: Billionaires fall as King rises to match Rishi Sunak

The King’s personal fortune has shot up by £30m to put him on par with Rishi Sunak and his wife Akshata Murty, while the overall number of billionaires in the UK has plummeted, according to The Sunday Times Rich List.

The 2025 list, published on Friday, shows the King’s personal wealth grew from £610m to £640m, taking him up 20 places to 258 – level with former prime minister Mr Sunak and his wife.

The number of overall UK billionaires has fallen to 156 from 165 in 2024, marking the biggest drop since the rich list began 37 years ago.

Gopi Hinduja and his family, behind the Indian conglomerate Hinduja Group, topped the list for the fourth year running with £35.3bn.

Meanwhile, founder and chairman of global chemicals company Ineos Sir Jim Ratcliffe, who became part owner of Manchester United last year, dropped from fourth place to seventh after his reported wealth went from £23.5bn to £17.05bn.

Sir Jim’s £6.47bn losses marked the biggest on the list, while Russian-born brothers Igor and Dmitry Bukhman, who built a fortune on mobile games such as Gardenscapes and Fishdom, made the biggest gains with nearly £6.2bn.

New entries included makeup mogul Charlotte Tilbury with £350m and Ellen DeGeneres, who left the US for the Cotswolds last year.

The Sunday Times said the list was one of its toughest to compile due to Donald Trump’s tariffs and the subsequent stock market turbulence, adding many from previous years had dropped off the list and others were no longer eligible having fled Britain after Labour’s non-dom crackdown.

Overall, the combined wealth of those on the list stood at £772.8bn – down 3% from the last list.

Speaking to Anna Jones on Sky News Breakfast, Rich List compiler Rob Watts highlighted the story of Tom and Phil Beahon, who own sportswear clothing brand Castore which is now worth £1bn, as one of his favourites.

The brothers from Wirral have debuted at joint 345 on the list with an estimated wealth of £350m.

Calling their story “inspiring”, Mr Watts said: “They dreamed of being sportsmen as lads – one of them got onto the books of Tranmere Rovers and the other played cricket for Lancashire, but their sporting careers were over in their early 20s.

“And they say that failure was critical to driving them to create this £1bn sports kit business that you’ll now see being worn by the England cricket team and the England rugby team.”

The top 20:

1. Gopi Hinduja and family – £35.3bn

2. David and Simon Reuben and family – £26.87bn

3. Sir Leonard Blavatnik – £25.73bn

4. Sir James Dyson and family – £20.8bn

5. Idan Ofer – £20.12bn

6. Guy, George, Alannah and Galen Weston and family – £17.75bn

7. Sir Jim Ratcliffe – £17.05bn

8. Lakshmi Mittal and family – £15.44bn

9. John Fredriksen and family – £13.68bn

10. Igor and Dmitry Bukhman – £12.54bn

11. Kirsten and Jorn Rausing – £12.51bn

12. Michael Platt – £12.5bn

13. Charlene de Carvalho-Heineken and Michel de Carvalho – £10.09bn

14. Duke of Westminster and the Grosvenor family – £9.88bn

15. Lord Bamford and family – £9.45bn

16. Denise, John and Peter Coates – £9.44bn

17. Carrie and Francois Perrodo and family – £9.3bn

18. Barnaby and Merlin Swire and family – £9.25bn

19. Marit, Lisbet, Sigrid and Hans Rausing – £9.09bn

20. Alex Gerko – £8.75bn

Business

Cryptocurrency platform Coinbase warns of up to $400m hit from cyber attack

Published

1 hour ago

May 16, 2025

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Cryptocurrency platform Coinbase warns of up to 0m hit from cyber attack

One of the world’s leading cryptocurrency exchanges has suffered a cyber attack that could cost it $400m (£301m).

Hackers breached account data of a “small subset” of its customers and then tricked them into sending funds, the company said in a regulatory filing.

Coinbase received an email from an unknown threat actor on 11 May, claiming to have information about some customer accounts as well as internal documents.

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The hackers did not gain access to login credentials or passwords, but data including names, addresses and emails were stolen, Coinbase said.

The hackers had paid multiple employees and contractors working in support roles outside the US to collect the information. Everyone involved has been fired, it said.

Coinbase will reimburse all customers who were tricked into sending funds to the attackers – and estimates costs surrounding the hack will total between $180m (£135m) and $400m.

The exchange refused to pay a $20m (£15m) ransom to the hackers and is working with law enforcement agencies. It has also established a $20m reward for information on the attackers.

Coinbase is also opening a new US support hub and taking other measures to prevent cyber attacks, it said.

This development comes just days before Coinbase is set to join the S&P 500 index – in what is expected to be a landmark moment for crypto.

Security remains a challenge for the industry and in February, Dubai-based Bybit disclosed a hack which saw around $1.5bn (£1.19bn) of digital tokens stolen – widely dubbed the biggest crypto heist of all time.

“As our nascent industry grows rapidly, it draws the eye of bad actors, who are becoming increasingly sophisticated in the scope of their attacks,” said Nick Jones, founder of crypto firm Zumo.