The British Retail Consortium (BRC) has urged UK Chancellor John Healey to raise the employer National Insurance contributions (NICs) threshold from £5,000 to £6,000, arguing that the move would support retail jobs as employment costs continue to rise.
The proposal comes ahead of the UK government's Autumn Budget on 28 October and follows changes to employer NICs introduced in April 2025, alongside increases in the National Living Wage.
According to the BRC, retail employment has fallen by 115,000 jobs over the past two years, while the cost of employing entry-level workers has risen sharply.
Higher costs hit retailers
Employers currently pay NICs at 15% on earnings above the £5,000 annual secondary threshold for most employees.
In April 2025, the employer NICs rate increased from 13.8% to 15%, while the secondary threshold was reduced from £9,100 to £5,000.
The BRC estimates that the lower threshold alone has cost retailers £1.74bn. It puts the combined increase in employment costs from the higher NICs rate, lower threshold and two above-inflation increases in the National Living Wage at £6.5bn over two years.
The organisation says the changes have had a disproportionate impact on retail, where 55% of roles are part-time. The lower threshold means employers begin paying NICs at a lower level of employee earnings.
The BRC estimates that the cost of employing a full-time entry-level worker has risen by 15% over the past two years, compared with 19% for a part-time employee.
It is calling for the employer NICs threshold to be raised to £6,000 in the October Budget.
Retail employment falls
The BRC says rising employment costs are making it more difficult for retailers to maintain and create jobs.
The issue is particularly significant for an industry that provides an important entry point into the UK labour market. According to the BRC, almost one in four people get their first job in retail, making the sector a major source of entry-level employment.
“Retail has always been one of the great gateways into work,” said BRC chief executive Helen Dickinson.
She said previous changes to employer NICs had “hit retail disproportionately hard” and that rising employment costs were making it more difficult for retailers to offer entry-level positions.
The BRC's concerns come as demand for workers across the wider UK economy remains subdued.
Office for National Statistics data show that there were an estimated 707,000 vacancies in May to July 2026, down 19,000, or 2.7%, from a year earlier. There were 2.5 unemployed people for every vacancy in April to June.
The ONS has also reported feedback from its Vacancy Survey suggesting that some small businesses may be holding back on recruitment because of higher labour costs and other operating expenses.
Retailers seek wider Budget relief
The NICs proposal forms part of a broader package of measures the BRC is seeking ahead of Healey's first Budget as Chancellor.
The organisation has also called on the government to address taxes and levies on retailers' energy bills, cancel the annual inflation-linked increase in business rates and remove shops from the high-value business rates multiplier introduced in the 2025 Budget.
The BRC argues that reducing these costs would give retailers greater scope to invest and recruit.
Dickinson said raising the NICs threshold to £6,000 would “boost retail job creation” while easing cost pressures on retailers and their customers.
The government has not committed to the proposal. Its tax and spending plans will be set out in the Autumn Budget on 28 October.
