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Shoe Zone to shut down locations due to Rachel Reeves’s National Insurance tax raid

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3 days ago

December 19, 2024

Shoe Zone to shut down locations due to Rachel Reeves's National Insurance tax raid

A serious retailer has confirmed that retailer closures are in its future following Chancellor Rachel Reeves’s resolution to launch a tax raid on companies as a part of her Autumn Price range.

Shoe Zone, which at present operates 297 shops with round 2,250 staff, has introduced a lot of its places might be pressured to close down because of the hike to Nationwide Insurance coverage. This is able to make the retailer the primary to hyperlink retailer closures to the insurance policies rolled out throughout the Chancellor’s Price range.

Lately, Britain’s excessive streets have been decimated by a wave of retailer closures with almost 10,500 places completely closing in 2023 alone, based on the Centre for Retail Analysis. Shops understood to be closing embody Burnham-on-Sea in Somerset, Boscombe in Dorset and Burgess Hill in Sussex.

Throughout her fiscal assertion in October, Reeves confirmed that the speed paid by employers would improve from 13.8 per cent to fifteen per cent for employers in April subsequent yr.

This has been slammed as a “tax on jobs” by main excessive road companies and supermarkets with Labour being urged to make a U-turn on its decision-making as quickly as potential.

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Shoe Zone has claimed it would shut its shops on account of Reeves’s Nationwide Insurance coverage raid

Earlier this morning, Shoe Zone issued a revenue warning and admitted the enterprise has skilled “very difficult buying and selling circumstances” for the reason that Autumn Price range announcement.

In response to the shoe retailer, gross sales and income have been already underneath stress on account of weak shopper confidence following the Autumn Price range amid the continuing price of residing disaster.

Moreover, Shoe Zone cited the impression of moist climate within the weeks main as much as the Chancellor’s speech which seemingly led to a drop in footfall for its excessive road places.

Nevertheless, the corporate took specific goal at Reeves’s transfer to lift Nationwide Insurance coverage charges on employers and hike the Nationwide Residing Wage in a double whammy hit to companies.

Britain’s excessive streets have been hit by a wave of retailer closures as of late PA

In an announcement, Shoe Zone acknowledged: “Client confidence has weakened additional following the Authorities’s Price range in October 2024, and because of this Price range, the Firm may also incur vital further prices as a result of will increase in Nationwide Residing Wage and Nationwide Insurance coverage.

“These further prices have resulted within the deliberate closure of various shops which have now develop into unviable. The mix of the above could have a big impression on our full-year figures.”

On account of this, the excessive road shoe store estimates income for the yr to September 27, 2025, to be “not lower than” £5million. This is able to be half the £10million beforehand projected.

Inside its wider retail portfolio, Shoe Zone is made up of 112 excessive road retailer and 185 bigger format shops. The organisation sells manufacturers resembling Skechers, Hush Puppies, Rieker and Lilly & Skinner.

Based mostly on official figures, it’s estimated that Shoe Zone sells round 13.9 million pairs of sneakers yearly to British shoppers at a median retail value of round £13.30.

David Maslen, the top of Tax at Previous Mill, broke down why elevating the speed paid by employers on Nationwide Insurance coverage just isn’t the most important change to the tax that companies will really feel.

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Reeves has beforehand ade clear that the get together’s manifesto pledge to not hike Nationwide Insurance coverage Contributions (NICs) solely associated to these paid by staff

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He defined: “Rachel Reeves’a 30 October Price range contained vital modifications to employer’s National Insurance that are on account of take impact from 6 April 2025. However the massive kicker for employers is that the secondary threshold will cut back from £9,100 to £5,000.

“The impression of this on employers could be understood when one appears to be like at an worker incomes a wage of £9,100. Beneath present guidelines, the employer’s Nationwide Insurance coverage legal responsibility for that worker is zero. Beneath the brand new guidelines, the burden is £1,600 per yr.

“The extra burden to employers is, subsequently, big. It’s a tax on employment and is a common disincentive to using employees. Nevertheless, there are classes of staff the place this extra NIC burden is not going to come up, and this doesn’t look like extensively understood.”

GB Information has contacted Shoe Zone and the Treasury for remark.