With employment supposedly rising and business confidence increasing, you might be considering expanding your workforce in the coming months. One of the questions I am often asked is “What will it cost to employ someone in my business?” So here is a little summary of the key points to consider, PLUS some details on a couple of government initiatives that are on the horizon to reduce that cost.
When considering employing someone, these are the main costs to consider:
- Their gross salary, of course, plus any benefits
- Add to this Class 1 Employer’s NICs, currently payable at 13.8% of gross salary for every £ over the secondary threshold (currently £7,696)
- The cost of a pension scheme, if you offer one (this will become mandatory under auto-enrolment which is on the horizon)
- Equipment / IT provided, plus any additional insurances that might be required
From April 2014 though, all businesses will be entitled to an annual “employment allowance” of £2,000 to reduce their liability for Class 1 Employer’s NICs. To claim the allowance, employers will complete an indicator on their payroll software, and the allowance will be automatically offset against each monthly Class 1 Employer’s NIC liability until the whole of the £2k is utilized. Great news!!
AND, in December’s Autumn Statement, it was announced that from next April (2015) Employer’s NICs would be abolished on all employees under the age of 21.
These two measures should make that decision to hire just that little bit easier.