UK businesses face dramatic cost increases starting April 2025

Labour costs in the UK are set to rise significantly next month, contributing to fears for businesses. This change is part of what some are calling "Awful April." Individuals will see increases in energy bills and mobile phone contracts, while businesses will have to manage rising National Insurance costs and a higher minimum wage. For many small and medium-sized enterprises (SMEs) and larger corporations, managing these costs will be challenging. They might need to pass on the increased expenses to customers, leading to higher prices, fewer job openings, or reduced investments. However, another major concern is the increase in business rates for the retail, hospitality, and leisure sectors starting on April 1, 2025. Currently, businesses in these sectors receive a 75% discount on rates, which will drop to 40%. This change could almost double the amount many businesses pay. For instance, a business with a rate of £25,000 would pay £15,000 after the discount change, compared to £6,250 now. Retailers could see average bills rise from about £3,751 to £9,003 annually, while restaurants may see increases from £5,563 to £13,351. The financial impact of these changes will vary. Some businesses may be able to pass on these costs to customers, but for others, this may not be possible. Consumers are increasingly sensitive to price changes, which could push some businesses to lower their profits. Small businesses with properties under £12,000 are exempt from paying rates, but those in the retail, hospitality, and leisure sectors could face a significant burden as costs increase. The government aims to freeze the small business multiplier, offering some relief for qualifying SMEs. Reforms to the rating system are expected in 2026, with the government consulting on future changes. However, many businesses will continue to feel the pressure of rising costs before those reforms take effect. There are concerns that some may not survive these economic pressures, leading to closures.