Rising employment costs in the UK are prompting businesses to rethink how and where they hire talent. Following changes introduced in last year’s Autumn Budget, employers now face higher payroll taxes and stricter labour regulations, making it increasingly expensive to recruit locally. As a result, many companies are exploring alternative solutions to maintain growth while managing costs.
Read the full article on London Reviews: “Britain’s company Dodge Labor Tax Raid with WFH roles abroad”
Hiring in the UK has become more expensive after last year’s Autumn Budget. UK employers now face contributions of around 15% on salaries above £5,000. Because of this, many companies have chosen to look to hiring abroad, specifically in South Africa. Employment taxes in South Africa are significantly lower than in the UK, with employers typically paying around 1% in payroll tax for employees earning more than about £20,700 per year.
The Legends Agency, which recruits workers in South Africa and places them with British companies, has been a leader in this revolutionary wave. The company has seen its revenue grow from £300,000 to £7.2 million in just 12 months.
Its London-based director, Alex Fenton, said the increase in employer taxes introduced by Chancellor Rachel Reeves has created opportunities for companies that provide overseas remote workers. “These services used to be available mainly to large companies,” Fenton said. “But smaller businesses are now being priced out of hiring locally. When you combine that with the success of remote work, small and medium-sized companies can absolutely make this model work.”
The Legends Agency currently employs around 1,000 workers and supplies staff to about 145 British companies. The company has seen its revenue grow from £300,000 to £7.2 million in just 12 months. Other agencies are seeing a similar shift. Another recruitment agency, Sauce, said it helped a content marketing company grow its revenue to $1 million (£736,000) by hiring remote employees abroad. According to the firm, specialists and sales representatives working remotely in South Africa can earn up to 70% less than UK workers, largely because the cost of living is much lower.
Tony Redondo, head of Cosmos Currency Exchange, which supports companies operating internationally, said he has seen a surge in cross-border payments. He said foreign payments through the platform have increased by 43% in the past six months. “The feedback from many of our corporate clients is that they are hiring overseas remote workers whenever possible,” Redondo said. “It’s partly because of higher taxes and partly due to the new employment rights legislation.”
Although the move to hiring overseas benefits UK-based businesses and overseas talent, it may lead to a negative impact on the UK job market. As mentioned earlier, the Legends Agency employs around 1,000 overseas workers. Fenton has estimated that the UK could collect roughly £9 million more in tax revenue if those workers were based in Britain instead.
Additionally, recent data from HR platform Employment Hero has suggested that job growth in London may already be slowing. The number of salaried employees in the capital increased by just 0.7% in April.
While hiring overseas remote workers offers clear financial advantages for UK businesses, the trend also raises important questions about its long-term impact on the domestic labour market. Lower costs, the success of remote work models, and growing support from international recruitment agencies are accelerating the move toward global hiring. However, if more companies continue to shift roles abroad, it could slow job creation and reduce tax revenues within the UK.
