The British Retail Consortium has urged Chancellor John Healey to raise the threshold at which employers begin paying National Insurance contributions by £1,000, arguing that the move would support job creation and ease pressure on entry-level employment.
In a letter to the Treasury ahead of the Autumn Budget, the retail industry body called for the employer National Insurance threshold to increase from £5,000 to £6,000.
The BRC said the change would be particularly important for entry-level jobs, which it argues have been disproportionately affected by rising employment costs.
Retail is the UK’s largest private sector employer and supports jobs across communities ranging from small rural areas to major cities.
The sector estimates that changes to the employer National Insurance threshold announced in the 2024 Budget and implemented in April 2025 added £1.74bn to retailers’ costs.
Combined with an increase in the headline rate of employer National Insurance contributions and two above-inflation increases in the National Living Wage, the BRC estimates that the industry’s total employment bill has risen by £6.5bn over two years.
The increase has coincided with a contraction in employment. The sector estimates that 115,000 retail jobs have disappeared over the same period.
Retail remains a major entry point into the labour market, with almost one in four people starting their working lives in the sector, according to the BRC.
The structure of the industry’s workforce also makes it particularly exposed to changes in the employer NICs threshold. Some 55 per cent of retail jobs are part-time, meaning many positions fell within the scope of employer contributions for the first time following the 2024 Budget changes.
The BRC estimates that employing someone in a full-time entry-level role became 15 per cent more expensive over two years, while the cost of employing part-time staff rose by 19 per cent.
Helen Dickinson, the BRC’s chief executive, said: “Retail has always been one of the great gateways into work, giving millions of people their first job and the skills and confidence to build a career.
“Previous changes to National Insurance contributions hit retail disproportionately hard and soaring employment costs are making it harder for retailers to offer the crucial entry-level roles that so many young people rely on.
“The Chancellor can turn the tide on unemployment and tackle the NEETs crisis that is robbing a generation of young people of opportunity. Raising the NICs threshold to £6,000 would boost retail job creation and ease the inflationary pressures bearing down on the industry and its customers.”
The proposed threshold increase forms part of a wider package of measures sought by the BRC ahead of the Budget.
The organisation is also calling for action to reduce energy taxes and levies affecting retailers, an end to automatic inflation-linked increases in business rates, and the exclusion of all shops from the high-value multiplier introduced at the 2025 Budget.
The lobbying campaign highlights the difficult trade-off facing the Treasury as it seeks to raise revenue while limiting the impact of higher employment costs on businesses and labour demand.
For retailers, the argument is that lowering the fixed cost of employing staff would help protect entry-level jobs and reduce the incentive for businesses to respond to higher costs through reduced hiring, fewer hours or higher prices.
For the government, however, raising the employer NICs threshold would reduce tax receipts at a time when the Chancellor faces competing demands on the public finances.
The BRC’s proposal is therefore likely to form part of a broader debate ahead of the Budget over whether the current balance between taxation, business costs and employment is weakening the UK’s ability to generate jobs, particularly for younger and less experienced workers.
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