Tag: Tax

European countries lead the way for quality of life

Business Name Generator has analysed 50 countries to reveal the best places to launch a startup. The study looked at; business tax rates, economic GDP growth, cost of startup procedures, country happiness, cost of living and quality of life.

Economic uncertainty may unnerve budding entrepreneurs, so knowing about the global landscape when starting or expanding a startup is critical.

The top 10 locations in the world to start up a business in 2023

  • The Czech Republic was the top country for startups – with low cost of starting a business and procedures costing just 1.1% of Gross National Income (GNI) per capita, combined with reasonable labour costs averaging £1,478.
  • The UK ranks sixth in the index, beating all other G7 countries, including the US and Germany. The UK is the only country where business startup procedures don’t cost a penny.
  • Germany, France and the US position outside of the top 10. The States placed 17th with startups expected to pay an average tax of 25.8% on capital generated.

Other key findings:

  • The Netherlands has the best quality of life rating out of every country in the ranking, with a score of 198 out of a possible 240.
  • Finland has the highest labour costs – but the happiest employees, scoring 7.84 out of 10, higher than any other country in the world.
  • Sweden placed third, with slightly lower labour costs of £3,531, but still relatively inexpensive start-up procedures at 0.5% of GNI per capita. However, business tax in Sweden is higher at 20.60%.

The Philippines is revealed to be the worst country in which to start a business. The cost of launching a startup is the highest among all the countries analysed, totalling 23.3% of GNI per capita. Businesses are also taxed at a higher rate of 25%.

Egypt comes in second place as the worst place to launch a startup. Despite the availability of low-cost labour, India ranks lowest in terms of happiness and quality of life, with a score of only 3.81 and 118.4. This could greatly impact job satisfaction, productivity, and overall well-being in the workplace. Additionally, the country’s 30% business tax rate may offset some of the savings gained from affordable labour.

Europe leads in terms of happiness and quality of life. However, when it comes to the cost of living, Egypt, India, and Argentina come out on top.

Chloe Chai, the spokesperson for Business Name Generator said: “Entrepreneurs face many important decisions when launching or expanding their business and choosing the right location is one of the most crucial. The location of a business can have a significant impact on its success, affecting access to resources, market demand, and competition. Entrepreneurs must carefully consider the economic, demographic, and cultural factors of potential locations.”

Research data can be found at: https://businessnamegenerator.com/the-global-startup-index/

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Concerns over cost of living more worrying than the pandemic   

In his Spring Statement, Rishi Sunak rightfully mentioned that talent is the backbone of the economy, and while it was disappointing to hear that National Insurance Contribution increases will go ahead, the 1% reduction in the lowest rate of income tax was a positive boost for millions of workers. The Chancellor has also set out plans to cut the basic rate of income tax from 20p to 19p from 2024, the first cut to the basic rate in 16 years.    

It is clear that the Government is aware of the strain the population is under with rising cost of living, but is it doing enough?  

According to survey from CV-Library, the Government’s Spring Statement has fallen short for UK professionals with the majority of the 4,000 respondents already in disagreement with Sunak. He stated that the UK labour market is in a strong position to deal with the current global challenges but 60% of respondents do not share his beliefs of optimism.  

The Government’s Spring Statement has fallen short for UK professionals as the latest survey from the UK job board, CV-Library, revealed.   

The vast majority, of the 4,000 respondents were already in disagreement with Sunak, and his statement last week that the UK labour market is in a strong position to deal with the current Global challenges with 69% feeling that the Chancellor is wrong about the job market and do not share his beliefs or optimism.  

On the day inflation hit a 30-year high, 71% of respondents said that concerns over cost of living have superseded worries about the pandemic. The survey revealed which costs UK professionals are most concerned about:  

  1. Energy 60%  
  1. Fuel 20%  
  1. Food 16% 
  1. Travel 4%  

Lee Biggins, Founder and CEO of CV-Library commented:“Our survey proves that rising energy costs are the biggest concern for most people and the Government simply isn’t listening. With UK workers having to wait up to two years for the 1p drop in income tax, the immediacy of the rise in the unemployment allowance is a welcome relief for UK businesses but, overall, there feels like little has been done that will make a significant impact and help drive the change and investment needed for growth.”  

Joanne Frew, Head of employment at DWF, commented on the employment implications of the announcements made by the Chancellor today at the Spring Statement. She said: “Although the Spring Statement will bring much needed relief to many, it is questionable what assistance it gives to those employers who are struggling to recruit and retain the best talent.  With such a competitive market many employers have been struggling with labour supply which inevitably has led to pay increases in certain sectors. Against a backdrop of a relatively robust labour market throughout the pandemic, pay increases are anticipated at 3% for 2022 reflecting a record breaking high according to the CIPD.” 

Ged Mason OBE, Morson Group CEO commented: “The conflict in Ukraine and the cost of living crisis has shone a light on the UK’s need to be more self-sufficient when it comes to energy, and though it wasn’t directly mentioned in the Chancellor’s statement, the government will soon be setting out its energy security plan, which will rubber stamp investment to scale up hydrocarbon, nuclear and renewable energy generation. This is what this country needs today, and we’re well-versed in these core markets to support ongoing skills demands, be it niche and volume labour requirements.  

Ken Brotherston, CEO at TALiNT Partners weighed in: “Whilst, on the face of it, there wasn’t much in the Chancellor’s spring statement for employers or employees, the increasing costs of travel and fuel can potentially be mitigated by optimising flexible working policies. Post-pandemic, more flexible working models are a clear direction of travel anyway, so those employers who are use these effectively can genuinely claim to not just being able to accommodate candidiates’ lifestyle preferences but save them money as well.” 


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TUC should be lobbying for statutory compliance

According to HIVE360, the recent blanket on umbrella companies will escalate the current war on talent and worker shortages, put pressure on pay rates and penalise both good and bad operators. The government’s call for evidence invites views from stakeholders on the role that umbrella companies play in the labour market, and how they interact with the tax and employment rights systems. It sets out the concerns that have been raised by some stakeholders, as well as government action already taken to tackle tax non-compliance and improve protection for workers, and closes on 22 February 2022.

David McCormack, CEO of HIVE360 has stated that the government’s current call for evidence on the umbrella company market – recruitment companies in particular – are already reeling from the effects of Brexit and the pandemic and the consultation’s timing could not be worse.

McCormack said: “A ban would penalise legitimate transient workers. It would put immense pressure on pay rates for umbrella workers, who struggle to understand the implications and will seek their current rate of pay as a PAYE rate, meaning higher pay rates that many companies simply can’t afford at this time. For the recruitment sector, this would mean vastly increased processing costs – which their clients would understandably be unwilling and unlikely to pay to cover the higher labour costs.”

McCormack, who has first-hand experience of the various payroll models used today and was the head of his own umbrella business before setting up HIVE360, believes that there is widespread misunderstanding of all umbrella companies, and people are tarnishing all umbrella businesses with the same brush. Commenting further, David said:

“The proposed total ban on the use of umbrella companies, would be a sledgehammer to crack a nut. Rarely does a blanket approach address the real issues, and an all-out ban on umbrella companies would be no exception. The TUC doesn’t appear to understand the roll of umbrella companies, or that there are multiple types. Rather than lobbying government for a total ban on their use, the TUC should be lobbying for statutory compliance and an independent statutory body that administers and polices clear rules and consequences, and which governs the industry in an effective, consistent and unbiased way.”

He added in a statement: “Companies have to take part in the government’s call for evidence on umbrella companies, which closes on 22 February. They must understand that HMRC doesn’t appear to be effective in curbing the multitude of ‘mini’ umbrella companies, which is the side of the industry that predominantly gets the whole industry a bad name, and involves the use of multiple companies to access multiple amounts of employers NI allowances and effectively removes the obligation to pay one of employment’s core statutory taxes.

“IR35 has tried to address this – but failed.  The simple solution is to require the end user and the recruitment agency to answer one simple question (and this could apply to labour only supplies or all agency supplies only) that simply asks: ‘Are you accessing the employers NI allowance yourselves or is your NI bill over £100,000?’ If the answer is yes from either party, then the agency should be liable for any unpaid employers NI.”

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Increase to NI tax will hit lower earners hardest

The government announced yesterday that National Insurance will increase by 1.25% to fund health and social care reform. There will also be an increase in taxes on share dividends.

APSCo responded to the announcement by warning of the impact these increases will have on the workforce and businesses.

Tania Bowers, Legal Counsel and Head of Public Policy at APSCo commented: “While we recognise the need for social care and NHS integration and reform, this manifesto breach is a concern in more ways than one. With 1.25% payable by both worker and employer – 2.5% in total – this will only serve to drive umbrella and PAYE agency worker costs up, which will exacerbate the on-going shortage of workers that UK employers are currently struggling through.

“The increase in dividend tax will only add more pressure to already stretched businesses. While the worst of the pandemic may appear to be over, many organisations are still trying to find their way out of a deep financial hole that they’ve been stuck in for the last 18 months. And with skills shortages impacting the bounce back for firms, adding an extra financial burden too soon could have a detrimental impact on the recovery of a significant proportion of UK businesses.

The REC’s Chief Executive, Neil Carberry also weighed in on the decision:

“It’s vital that the social care system is properly funded – this has been a long time coming. But the 1.25% rise in National Insurance, the UK’s biggest business tax, is the wrong choice. As a tax on jobs, and a tax on activity rather than profits, rising National Insurance will fall more heavily on the labour-intensive sectors most affected by the pandemic. It also disproportionately affects lower earners. We all agree that social care needs more funding but increasing labour taxes as we try to recover from the pandemic is not the fairest way to do it.”

Have you got news to share with us? Please email debbie@talintpartners.com

Photo courtesy of Canva.com

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The Government was urged to think again after being accused of “going to war” on the most vulnerable by slashing contractors’ take home pay.

HMRC says plans to largely scrap travel expenses for Britain’s most flexible labour force will net the Chancellor just &pound265m but UK employers face a £7bn bill, warned trade association Prism.

Prism is a not-for-profit trade body whose members provide payroll, accountancy, umbrella and other services to contractors.

It believes the proposals threaten to hamper British industry and cripple public bodies as employers face having to make up the shortfall to stop workers walking out.

From April 2016 HMRC plans to stop contractors claiming travel and subsistence expenses from home to temporary workplaces if anyone they work with has the right to & lsquo;supervise, direct or control’ the way they work. Prism believes this goes too far and could include all workers.

Prism CEO Crawford Temple said: “The taxman is going to war on temporary workers and contractors. These are people for whom there is no normal commute as they move around different workplaces, sometimes working for dozens of companies a year over a wide area.

“These workers have always been able to rely on claiming travel expenses from home to temporary workplaces and that has been one of the few benefits of being a contractor.

“We estimate a 20 per cent shortfall in take-home pay if HMRC brings these changes in. The burden will be borne by Britain’s employers and the lowest paid as a gap in pay emerges overnight. The most flexible part of our workforce will become the worst off with the fewer benefits and the least protection.”

HMRC admits in discussion documents that the drop in take home pay could make it harder for the Government to hit its child poverty targets, adding: “This measure may affect some families with low income and family member’s ability to play a full role in family life.”

HMRC’s complex proposals will have bizarre consequences which will mean permanent employees getting travel expenses while contractors working alongside them do not, Prism said.

Prism says research among members suggests employers will need to spend 25 per cent more on contractors to maintain rates of take-home pay. Based on average UK earnings, it estimates that would cost employers &pound6.9billion.

The effect of the changes on Government departments could be crippling.

The NHS has already been criticised for the amount it spends on agency workers.

In May it emerged NHS spending on temporary workers had shot up &pound800m to &pound3.3bn in the last financial year and hundreds of thousands of them could be contractors.

An unintended consequences will be that contractors doing special projects a long way from home will have to turn work down altogether, Prism says.

Mr Temple added: “This workforce also services some of the most important public projects from bridges to power stations to understaffed hospitals. Many professional will be unable to accept work if it’s a long way away.

“These changes are cynical because they are totally unfair to the contractor who has fewer employee benefits, no job security, no sick  or holiday pay and no company pension. Rules to tackles workers who do not deserve travel expenses already exist but HMRC find it easier to penalise everyone rather than go to the trouble of enforcing them.

“UK Plc overall will become less competitive, struggling workers will pay more tax and employers will face higher costs at a time when budgets are under severe pressure.

“We are not defending people who behave like employees but disguise themselves as contractors. Travel expenses for itinerant workers are a huge and unpredictable expense. Ministers are reaching into the pockets of those with the least job security and cutting the amount they take home by 20 per cent overnight. It’s an utter shambles at a time when the most flexible section of our labour force are key to the economic recovery.

“When you risk disposable incomes or burdening industry with colossal costs you put that recovery at risk.”


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