Subscribe to Our Newsletter
Subscribe to our newsletter to stay updated on our news
The Cost of Employing Staff
Taking on employees can be essential for a business to grow and increase its capacity.
However, before taking on employees does your business make enough money to pay its wage bill each month?
When looking to take on employees you need to consider the true cost of employing them.
You may look at the salary you will pay an employee to see whether your business can afford them, but you also need to take account of Employers National Insurance and Workplace Pensions.
Employers National Insurance
At the time of creating this article Employers National Insurance is charged at 13.8% on an employee’s wages above £166 a week.
This can make a significant difference to the expected cost of taking on an employee.
There is a relief for Employers National Insurance called the Employment Allowance, which means that businesses do not need to pay the first £3,000 of Employers National Insurance that they incur in a tax year.
Workplace Pensions are a requirement for all business that employ anyone that is between 22 and state pension age and earn more than £10,000 a year.
Employees and their Employer both need to contribute to the pension scheme and the minimum contribution for the 2019/2020 tax year is 5% for the employee and 3% for the employer.
There is no relief for the employers pension contributions, other than the contributions paid being tax deductible on the businesses tax return.
When you are considering whether you can afford to take on an employee you cannot simply look at their salary.
An example of the true cost of employing a member of staff is:
Employee’s Annual Salary: £24,000
Monthly Gross Pay: £2,000
Monthly Employers NI: £176.73
Monthly Employers Pension: £60
Therefore the monthly cost of the employee is £2,236.73, which is £26,840.76 a year.
Processing a Payroll
Whether you have 1 employee or 100 employees, your business needs to complete submissions to HMRC for the wages that are paid to staff.
This can be very time consuming and if not done correctly can lead to fines, penalties and interest.
If you are unsure of your requirements or how to file your payroll information with HMRC why not outsource your payroll processing?
If you would like to discuss payroll outsourcing please contact Edwards Bailey Chartered Accountants on 01708 200675 or email us at email@example.com.
Share this article
Tax on Cryptocurrency: An Overview of the 2022/2023 Tax Rules
Tax on Crypto Currency Cryptocurrency has become a popular investment option in recent years, with the rise of Bitcoin and other digital currencies leading the way. However, the tax implications of holding and trading cryptocurrency can be a minefield. In the UK, cryptocurrency is subject to capital gains tax, and in some cases, income tax…
The Right Business Structure: Pros and Cons
The Right Business Structure for You Starting a business can be an exciting and challenging time. Choosing the right business structure is an important decision that can affect the success of your business. In this article, we’ll explore the most common business structures in the UK and help you understand the advantages and disadvantages of…
Do I Need to File a Tax Return If I Am Employed?
Do Employees Need to Complete a Tax Return? Most of the time you do not need to complete a self assessment tax return if you are employed and have no other sources of income. However, there are exceptions to this such as: That’s why we’ve put together this guide to help you understand everything you…
Get In Touch
If you would like to discuss the services we offer or for a no obligation quote please contact us using the details on the right.
"*" indicates required fields