According to a recent study by UHY Hacker Young, upcoming changes to the pensions system could see the UK lose its edge on employment costs.
The auto-enrolment scheme will see all employers make a mandatory minimum contribution of 3% of salary to their employees’ pensions from 2018.
The survey suggests that this could cost new companies £380 more per employee each year from 2018.
Currently the UK’s employment costs are low in terms of the amount of taxes and social security payments that an employer has to make in addition to an employee’s salary.
A worker earning £18,740 currently costs a UK employer £1,553 per year in national insurance contributions on top of their salary, the lowest level in the G8. Under the new rules, from 2018, UK employers could have to pay £1,916 for the same employee – much higher than an American (£1,654) or a Canadian company (£1,712) pays.
Roy Maugham, Head of Tax, London, says: ‘The cost of employing someone in the UK has risen over the last few years, and is set to rise even further in this decade. The UK is being caught up by other countries on employment costs and is about to be overtaken by key economic rivals.’