£2,300 rise | Cost of employing low-wage workers to hit record high in 2025

This year will be the most expensive on record for businesses who employ workers on the minimum wage, according to new analysis. 

Research by the Centre for Policy Studies shows that the tax wedge – the combined amount of tax paid by employees and employers – for those on minimum wage will equate to a shocking 21.3% of salary in 2025.

Since the minimum wage was introduced in 1999, the tax wedge has fluctuated. In 2010, it stood at 18% but the Coalition government reduced this to 11% in 2015, primarily by increasing the income tax personal allowance. 

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Although this increased over time, owing to wages rising faster than the personal allowance thresholds, by 2024 the amount of tax paid per minimum wage worker stood at 17.5% of the salary – still lower than in 2010.