In the first Labour budget, Chancellor Rachel Reeves introduced a series of fiscal measures which will affect the jewellery sector.
Key changes include a 40% business rates relief for retail, hospitality, and leisure businesses, coupled with increases in employer National Insurance (NI) contributions and the National Living Wage.
The budget reflects the government’s focus on economic recovery and addresses concerns around retail crime, wage growth, and fiscal responsibility. Here’s what jewellers need to know.
Business Rates Relief and New Challenges for 2025
The Chancellor announced a 40% business rates relief effective from April 2025 for the retail, hospitality, and leisure sectors, capped at £110,000 per business. This adjustment replaces the current 75% discount, leading to increased financial pressure for many jewellers, especially independent and small businesses, as they adapt to rising overheads. Larger stores and distribution centres, which already attract high business rates, may face an even heavier burden with the introduction of a higher tax multiplier for “most valuable properties” beginning in 2026.
British Retail Consortium (BRC) CEO Helen Dickinson responded, saying, “Retailers welcome future action on rates…[but] the solution is not to simply shift the burden around the industry.” Jewellers and other retail businesses will need to watch for further details on these rate adjustments, hoping they will support retail growth across all business sizes.
Rising Employer Contributions and Labour Costs
The budget outlines a rise in employer NI contributions from 13.8% to 15% beginning in April 2025, coupled with a lower threshold for employer contributions, dropping from £9,100 to £5,000. Although the Employment Allowance will increase to £10,500 to help small businesses manage these changes, independent jewellers and smaller retailers will likely face additional expenses. The Association of Convenience Stores (ACS) noted this as a significant challenge, with CEO James Lowman highlighting how businesses might need to choose between cutting investments or reducing workforce sizes.
Additionally, the minimum wage will rise by 6.7% from £11.44 to £12.21 per hour. For the jewellery sector, where payroll and wage costs are often substantial, this adjustment could further affect profit margins and prompt adjustments in staffing or operational strategies.
Tackling Retail Crime: New Funding to Improve Safety
Responding to rising shoplifting and retail-related crime, the budget includes funding to support police training and to help combat organised retail crime. For jewellers, this measure is especially relevant given the high-value nature of their merchandise. The BRC has advocated for increased enforcement, and the additional funding could offer meaningful support, with Retail Trust CEO Chris Brook-Carter noting, “We welcome…funding being announced to crack down on retail crime…to help better tackle this issue.”
Wage and Tax Policies: Balancing Employee and Employer Needs
Labour’s commitment to no increases in employee NI, income tax, or VAT contrasts with the higher NI contributions that employers must absorb. As the government positions these tax hikes as essential to manage a reported £22 billion fiscal shortfall, some in the industry argue it creates additional challenges for low-margin sectors like jewellery retail.
The increase in National Living Wage, intended to support wage growth, has received mixed feedback. While higher wages support workers, jewellers may need to adjust investment and staffing plans to manage this shift. Retail Trust’s Brook-Carter voiced support for the wage increase but acknowledged the pressures on businesses with limited profit margins.
Industry Sentiment: Responses and Forward-Looking Implications
Representatives from various retail associations have expressed concern over the budget’s potential strain on retailers. Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA), described it as one of the most challenging budgets for independent retailers in recent memory. The reduction in business rate relief and rising labour costs may, he warned, “force many shop owners to make difficult decisions about their businesses’ future.”
