UK employment taxes rise as global levels fall

EMPLOYMENT TAXES have risen to over 11% of an employee’s salary in the UK, despite other European countries witnessing a fall in their employment taxes, a new study has revealed.

Accountancy group UHY Hacker Young says that UK employment taxes, which have risen from 11.2% to 11.5% since 2012, could have a severe impact on job creation and income growth in the UK for years to come.

UHY says that businesses in the UK are now paying an average of £5,460 per year in employment taxes on top of employees’ wages, for an employee earning £47,680. This has increased from £5,360 in 2012.

Globally, the average has fallen from £8,680 to £8,460, or 17.7% of an employees’ salary. On a European level, the average for employment taxes paid by the employer dropped from £9,700 to £9,130 or 19.8% to 19.2%.

Germany saw employment costs for the largest businesses fall by nearly a fifth, from £10,050 to £8,430.

However the UK’s rise in employment taxes is nowhere near as high as China’s, with taxes increasing by almost half since 2012, from 12.6% to 18%. Employers in China are now paying an average of £8,550 per year in employment costs for an employee earning £47,680.

Roy Maugham, tax partner at UHY Hacker Young, believes that the government’s introduction of auto-enrolment in 2012 is hitting the UK’s global competitiveness.

“The government’s introduction of “auto enrolment” pension schemes may also be putting an additional burden on businesses. Add that to other measures like the National Living Wage and employers are seeing cost burdens being heaped on across their workplace. Inevitably, that will hit new job creation.

“At a time when the global economy is only gradually returning to health and the recovery is still very fragile, ensuring that revenue-raising policies don’t disincentivise job creation and stifle income levels is more vital than ever,” continued Maugham.

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