The UK has one of the lowest payroll tax burdens for businesses, with the average cost of employing a worker on £30k being £3,000.
A new study by accounting company UHY shows Britain is below the European average, with the cost of keeping a worker in their job being 10 per cent of their salary, less than the EU in which it’s 20.7 per cent.
A key reason behind a higher burden in European Union countries, is due to costs like social security, insurance and pension contributions.
This comes after the mini-budget earlier in the year which lowered the national insurance rate to 12 per cent, and cancelled the social care levy in April. Jeremy Hunt confirmed these changes in his recent budget.
Lower costs for employing workers means firms are less likely to need to make layoffs, which is important amid tough economic times, high inflation, rising interest rates and recession.
Subarna Banerjee, Chairman of UHY International, said: “The recent mini-Budget has been one of the more controversial budgets of recent time, however, keeping national insurance low will make it cheaper to retain staff if the UK does enter into a recession. That will hopefully keep more people in jobs over the coming years.”
“The cut in NI also keeps the payroll tax burden for UK employers well below the EU and global average.”
Banerjee added that firms “could directly be incentivised not to make redundancies if governments reduced employment taxes.”
“Many economies have enjoyed near-record levels of employment in recent years, but that is expected to change. Keeping as many people as possible in work should be a key target for policy-makers in the coming months. A rise in unemployment will only exacerbate the issues many countries are facing due to consumer spending dropping sharply.”