Banks warn UK National Insurance rise could cost jobs
The increase in National Insurance payments announced in last week's UK budget could lead to job losses in financial services firms, human resources executives say.
George Wilson, group head of human resources at Rothschilds, said: "For many firms, looking at costs means looking at people. The extra National Insurance payments could mean more redundancies at some banks."
The budget change adds about 1,000 to the cost to an employer of paying someone 100,000 a year. For large firms, this will amount to millions of pounds in extra National Insurance.
Wilson said the budget changes would also encourage employers to give more remuneration to staff in ways that do not involve National Insurance payments.
Human resources executives at other firms said they already make use of offshore trusts to pay bonuses to some staff in ways that reduce UK income tax and National Insurance. Share and share option schemes are also used to reduce, or at least delay, such payments. Use of such schemes could now increase, the executives said.
Wilson said: "We're glad the National Insurance increase was only one percentage point. It could have been worse."
Other human resources executives said they thought the increase would make little difference to pay structures.
The days when banks aggressively tried to avoid tax were over, they said, as it was bad for their image and brought the Inland Revenue breathing down their necks.
