Restaurants brace for Reeves’s £25bn tax raid as hospitality job cuts loom

The hospitality and retail sectors in Britain are preparing to raise the tax on the horizon in April on national insurance contributions to employers (NIC), as well as a sharp rise in the minimum wage, both of which warn industry leaders of job losses and further price increases.

Dominic Chapman, who runs Crown Burchitts Green and Restaurant Dominic Chapman in Henley, is preparing by reducing costs and investing suspension:

It is about beating in the gates. We are very careful with the number of employees, and in the end, the prices may be forced to keep the doors open. “

It is a common refusal through restaurants, bars, cafes and hotels, which faces what many calls a “raid” worth 25 billion pounds under the measures developed by Chancellor Rachel Reeves. Official data reveals that the number of workers working in residency and food services decreased by 58,000 between January 2024 and January 2025. The retailers, retail and cars have also disposed of more than 36,000 roles in the same period.

From April, employers face an increase in NICS from 13.8 % to 15 %, while the profit threshold that begins to start contributions will be reduced from 9100 pounds to 5,000 pounds. Besides an increase of 6.7 % in national living wages, analysts at the Institute of Financial Studies (IFS) estimate that one full -time employee may cost more than 24,000 pounds annually.

Paul Pavly, hospitality advisor and non -executive director in a delicious group, says these installation costs leave the operators only a few, but we look at 10 employees, while searching for quality recruits that can manage heavier work works: “We are looking for 10 % increase in increase in Labor costs for one person.

Both hospitality and retail trade have an increase in sharp wages. The latest wage growth showed an annual increase by 6.6 % in this sector in 2024, partially stems from a jump of approximately 10 % last April at the minimum wage. These rapid increases caught the attention of the Bank of England, as it is concerned that the pressure of the established wages may prolong the inflation – which limits or delaying more cuts in interest rates.

Official expectations indicate that inflation may increase from 2.5 % to 3.7 % later this year, partly due to the increased energy costs, increasingly, high prices with companies responding to NIC changes.

While hospitality and retail trade are struggling with a decrease in the number of main dates, government employment has increased. Health and social care roles have expanded by 92,000 over the past year, which almost reflects the loss of private sector in retail and hospitality.

Economists note that economic lack of activity-which includes long-term patients and those who do not seek work-have improved a little. However, business owners such as Andrea Raska, founder of the London Food Market Series, Mirbolitano, fears for the closure if the government continues with NicS: “It seems as if they only want the biggest chains to survive. The increasing taxes are setting smaller and independent ports To fail.

England's Monetary Policy Committee is under pressure to a balance between facing inflation and avoiding unjustified harm to companies. Economists at EY ITEM Club expect that the bank will continue with caution when considering more price cuts, bearing in mind that high taxes, wages and energy bills can create new inflationary risks.

Meanwhile, restaurants, bars and shops are ready for a difficult spring, and weighing whether they will increase prices or reduce jobs or both. As Chapman notes, the balance between the need to remain a solvent against the provision of value and the detained employees has become a difficult act – one of them is likely to increase the changes of April tax.

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