British outsourcing behemoth Serco has signalled to its investors that the tax amendments detailed in the º£½ÇÊÓƵ's Autumn Budget could lead to a surge in costs by approximately £20m for the company.
The firm briefed its shareholders today, highlighting that the impending changes, including the reduction in the threshold for national insurance contributions and the hike in employers' national insurance tax rate from 13.8% to 15%, will inflate its labour expenses, as reported by .
Serco has calculated that these adjustments will directly add about £20m annually to its labour costs starting from April 2025.
In response to these financial headwinds, Serco is "actively exploring ways to offset these costs".
Concurrently, the company disclosed that it was unsuccessful in resecuring a contract for an immigration detention centre and associated services in Australia.
Since October 2009, the London-listed entity has been collaborating with the Australian Government on immigration services.
The termination of the existing agreement is scheduled for 10 December 2024, with Serco asserting it "submitted what we believed to be a compelling bid."
Retention of the contract would have likely resulted in a revenue of around £165m and an underlying operating profit of £18m for the year 2025.
Nevertheless, Serco anticipates one-off end-of-contract cash costs in the region of £20m, which have already been accounted for in line with its standard accounting practices.
Not only in Australia has the group been facing recent setbacks. As reported by City AM last week, Serco has initiated legal action against the º£½ÇÊÓƵ government due to a missed prison services contract.
