The Federation of Independent Retailers (NFRN) has warned that a rise to the national minimum wage and National Insurance contributions to fund social care could force local stores out of business.
The comment as the government announced a 1.25 per cent increase in national insurance contributions paid by both employees and employers.
According to the NFRN, for an employee earning an annual salary of £20,000, the employer and employee will each pay an additional £130 a year in contributions.
The increase in the national minimum wage will also cause an increase in pension contributions being paid.
“While the government is taking steps to solve major problems in our health and social care, a large part of the burden of these changes will hit already hard-pressed retailers,” NFRN national president Stuart Reddish said.
“The cumulative effect of the NI changes, minimum wage increase and resultant increases in pension contributions will push more local businesses towards not being financially viable. Every store put out of business will have a detrimental effect on their local communities.
“We can only hope that the government realises the dangers for the independent retail sector and takes the opportunity to relieve at least some of the burden on store owners, as part of the business rates review this autumn.”
The news comes as the British Independent Retail Association (BIRA) has also warned the tax increase will “further burden” independent stores before they have even recovered from the financial loss of lockdown.
The “disappointing” decision will unfairly impact small businesses and lower-paid workers, according to BIRA.