Study Highlights Higher UK Taxes On Hiring

by Robert Lee, Tax-News.com, London

26 February 2016

UK businesses now pay employment taxes of 11.5 percent on top of employees' annual salaries, according to a new report covering 29 countries from UHY Hacker Young.

This burden, from social security contributions and other employment-related levies, is up from 11.2 percent in 2012.

UHY Hacker Young calculated the value of payments companies have to make on top of the gross salary they pay to individual employees for 29 countries.

In the UK, businesses now pay an average of GBP5,460 (USD7,615) per year in employment taxes. During the same period, the global average fell from GBP8,680 to GBP8,460, or 17.7 percent. The European average dropped from 19.8 percent to 19.2 percent.

Roy Maugham, Partner at UHY Hacker Young, warned that the "rise in employment-related taxes in the UK could impact competitiveness and limit much-needed growth."

He said: "The Government's introduction of 'auto-enrolment' pension schemes may also be putting an additional burden on businesses. Add to that other measures like the National Living Wage and employers are seeing cost burdens being heaped on across their workplace. Inevitably, that will hit 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 disincentinvize job creation and stifle income levels is more vital than ever."

UHY Hacker Young said Brazil has the highest taxes and compulsory insurance costs for employers of any country in the study, at 71.4 percent of a USD75,000 salary. This is almost 50 times higher than Egypt, the country with the lowest employment-related tax burden for employers in the study. The burden on Chinese employers saw the largest increase in 2015, with the tax burden rising from 12.6 percent to 18 percent.

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