Chancellor’s tax hikes on retailers will see more going into administration

Online retailers are also struggling due to increased staffing costs caused by higher National Insurance Contributions (NICs) and minimum wage, say leading audit, tax and business advisory firm, Blick Rothenberg.

Mark Cunningham, a Partner at the firm, said, “The primarily online maternity fashion brand, Seraphine, going into administration is a reminder that it’s not just high street retailers struggling with higher staffing costs due to the Government’s tax and employment policies.

“Retail businesses that employ a high proportion of lower paid workers are among those facing the most financial pressure from higher NICs and minimum wage.

“While upfront employment rights improve conditions for workers, they present challenges for employers in managing costs and workforce flexibility.

“UK retailers, who are often mostly online like Seraphine, need clarity and advance notice from the Government on any planned tax or employment legislation before the Autumn Budget so they can prepare in advance.

“Although internet giants like Amazon can weather the storm of unexpected cost rises, partly through further automation, our home-grown online retailers, like Seraphine, clearly cannot.”

Retailers are being hit with the increase in NICs, higher taxes, business rates and paying the rent on premises, also there is the looming threat of further tax rises in the upcoming Autumn Budget.

Cunningham added, “Retailers operating on the high street also need more support. High-street retailers have to contend with the pressure of paying rent and business rates, both of which are increasing.

“A longer-term reform of the business rates system is needed, one that reflects the realities of modern retail and helps level the ground between online and high street businesses.

“Consumer demand is already fragile, and the prospect of tax rises in the Autumn Budget will only add to that uncertainty. Retailers need clarity and support from the government. Without it, one of the UK’s most visible sectors will be weakened even further and more household names could be lost.”