Businesses across the East Midlands are paying less in social security and other employment ‘taxes’ compared with four years ago according to a new study by Nottingham accountancy firm UHY Hacker Young.
Globally, this extra cost accounts for some 20% of an employee’s annual salary, but the figure in the UK is much lower at less than eight per cent – a reduction of 2.6% compared with 2012.
Experts at UHY believe this is positive news for the jobs market as high employment costs put job creation and real income growth at risk.
Simon Browning, tax partner at UHY in Nottingham, said: “This is encouraging for the UK market as the story is not quite as positive in other countries across the globe where they are experiencing increases in employment costs – The Netherlands for example has seen costs double since 2012.
“Reducing the tax burden on employers is important when looking to tackle unemployment and that is something that seems to be working across the UK as the unemployment rate continues to drop.
“Increasingly we are seeing targeted measures aimed at increasing employment levels, not just in the UK but world-wide. For example, employers in the UK now pay less National Insurance for employees aged under 21.
“Such measures help to stimulate the jobs market which is good news both for the unemployment rate and economic growth and it is pleasing to see that the figure in the UK is decreasing.”
The research examined 29 countries globally and the amount of employment tax paid by businesses, revealing the percentage paid in terms of employment tax and the change compared with 2012.
The UK was ranked 13th paying 7.9% of gross salary in employment tax – recording a 2.6% decrease since 2012. This compared with a global average of 20.5% of gross salary but a decrease in proportional taxes paid of five per cent.
