Recruitment Newsletter - Spring 2015 by Lauren Aston

RAFFINGERS STUART RECRUITMENT NEWSLETTER SPRING 2015

SMALL DETAILS

BIG DIFFERENCE *Recruitment Industry Network

Budget 2015 - Taking Britain from Austerity to Prosperity

Say Hello to CrunchBoards

Employment Rate ‘Reaches AllTime High’

A review of the key announcements made by the Chancellor, George Osborne, at the Budget 2015.

Analysis, forecasting, alerts - gain control of your agency’s finances by getting instant, up-to-date financial information.

Iain Duncan Smith MP confirms the strength of the current UK employment landscape.

Page 03

Page 05

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Contents

Welcome and Partners

Special Feature Budget 2015 - Taking Britain from Austerity to Prosperity

Say Hello to CrunchBoards

Employee Spotlight

Save Time When Processing Your Agency’s Expenses

The Full Story Recruitment Sector Overview

Events 2015 - The Story So Far

Employment Rate ‘Reaches All-Time High’

Technology Companies Surging in Popularity

Partner’s Perspective What Accountancy Software is Best for You?

PP SMALL DETAILS BIG DIFFERENCE

Welcome to our RECRUITMENT SPRING Newsletter Now that the dark nights are drawing to a close and the weather is a little brighter, we bring you the third edition of our Recruitment Newsletter and with it a summary of the Budget 2015. In a Budget that proclaimed ‘we are all in this together’, George Osborne was extremely confident, declaring that the government will be doing more to back business, more to encourage manufacturing and more to support savers, pensioners and working families. However, the key point the recruitment sector needs to take note of is that the government is continuing to clamp down on tax avoidance and “will stop employment intermediaries exploiting the tax system”, declared George Osborne. To find out more, see page 3. Speaking of changes, there is a lot going on in the Raffingers Stuart office at the moment, specifically in regards to Xero and CrunchBoards. We are extremely excited about CrunchBoards and the potential it has, check out our article on page 5 to find out more. Also, not forgetting our Recruitment Sector Overview, giving you all of the facts and figures from the sector. If you would like to be featured in our next client story, or have any suggestions for topics that you would like to see discussed in the next edition, please get in touch. The Partners at Raffingers Stuart

Raffingers Stuart Partners

Gary Inglis Managing Partner gary.inglis@raffingers-stuart.co.uk

Andrew Coney Partner andrew.coney@raffingers-stuart.co.uk

Lee Manning Partner lee.manning@raffingers-stuart.co.uk 2 Adam Moody Partner adam.moody@raffingers-stuart.co.uk

Suda Ratnam Partner suda.ratnam@raffingers-stuart.co.uk

Barry Soraff Partner barry.soraff@raffingers-stuart.co.uk

Paul Dell Partner paul.dell@raffingers-stuart.co.uk

RAFFINGERS STUART RECRUITMENT NEWSLETTER SPRING 2015

Budget 2015 Taking Britain from Austerity to Prosperity SPECIAL FEATURE In what was forecast to be a bold, dynamic and breakaway Budget, George Osborne began by confirming the key achievements of his government: ● Deficit figures are the best they have been for 15 years ● Unemployment has fallen by a further 100,000 and £1.9 million jobs have been created

Budget 2015

● Living standards have improved - living standards in 2015 are now higher than they were in 2010 (OBR)

To now build upon these successes, the Chancellor went on to outline the changes in store for both businesses and individuals.

Changes for Businesses

Firstly, the key point that those working in the recruitment sector need to be aware of is that the government will continue to clamp down on umbrella companies. George Osborne confirmed,

The Annual Investment Allowance (AIA) is still forecast to fall next year from £500,000 to £25,000. However, the Chancellor announced that the fall will now be set at a more generous level, although no figure was given.

“We will stop employment intermediaries exploiting the tax system”

Corporate Tax Rate

“[We will be] clamping down on the agencies and umbrella companies who abuse tax reliefs on travel and subsistence”. The government is continuing to take tax avoidance seriously and to level the playing field among umbrella companies, travel and subsistence relief will be restricted for umbrella and PSC contractors if their end-user supervises, directs and controls them. This new measure, to take effect from April 2016, will mean that tax relief for home-to-work travel expenses will not be available to such contractors. Other key changes to be introduced are as follows... SMALL DETAILS BIG DIFFERENCE

Capital Allowances

From 1 April 2015 there will be a single rate of corporation tax of 20%. This will be one of the lowest rates for a country that is not a tax haven. Research and Development (R&D) From 1 April 2015 increases will be made to the R&D tax credits. This means SMEs undertaking qualifying R&D activities can reduce their corporation tax bill by up to 230% (an increase of 5%). Larger companies will also be able to reduce theirs by 11% (an increase of 1%). Enterprise Investment Scheme (EIS) The requirement that 70% of funds raised under Seed Enterprise Investment Scheme (SEIS) must be spent before EIS or Venture Capital funding can be raised will be removed from 6 April 2015.

Furthermore, a cap of £15m will be introduced for the total investment that can be received under tax advantage Venture Capital schemes. For knowledge intensive companies this cap will be increased to £20m and the employee limit will be raised from 249 to 499. Diverted Profits Tax From 1 April 2015 multinational enterprises that make use of aggressive tax planning will be subject to a ‘Diverted Profits Tax’ (DPT). This is the so-called ‘Google Tax’ designed to discourage large companies diverting profits out of the UK VAT From 1 April 2015 the VAT registration threshold will be increased from £81,000 to £82,000 and the deregistration threshold from £79,000 to £80,000. Entrepreneurs’ Relief (ER) With effect from 18 March 2015: Joint ventures and partnerships Disposals of shareholdings will only qualify for ER where at least 5% of the direct shareholding is in a trading company. Any joint venture company or partnership will need to demonstrate their trading status separately. Associated disposals Where a personal asset, such as a building, is used in a company or partnership and is disposed of, no ER will be available unless there is an associated disposal of at least a 5% shareholding in the company or a 5% share of partnership assets.

Changes for Individuals Abolishing Tax Returns HMRC will now be using Digital Tax Accounts (DTA) to prepare tax returns. Any information that HMRC has (bank interest, employment income, benefits) will be prepopulated on to this ‘secure digital tax account’. More information will be provided by HMRC in 2015 outlining how this will work and who it will apply to.

Personal Allowance Please see below the personal allowances from 6 April 2015 (2015/16) onwards: 2015/16

2016/17

2017/18

£10,600

£10,800

£11,000

Personal Savings Allowance From 6 April 2016 a basic rate taxpayer will be able to take advantage of a new personal savings allowance of £1,000. Those earning less than £42,700 will have full access. This will reduce to £500 for 40% tax payers and will cease to be available for 45% tax payers. Help to Buy ISA From Autumn 2015 anyone aged over 16 can access a Help to Buy ISA, giving much needed help to first time buyers. Maximum monthly savings are £200 per individual (plus £1,000 initial deposit) of which the government will add a 25% bonus to. Therefore, savings up to £12,000 are eligible to a bonus of £3,000. Flexi ISA

From Autumn 2015 cash ISAs will be more flexible with savers being able to withdraw and replace money in the same tax year without it counting towards their annual limit. Pension Announcements From April 2016 the Chancellor confirmed that pensioners will be able to sell existing annuity income to a willing third party in exchange for a capital sum, taxed at the pensioner’s marginal rate of income tax. Furthermore, from April 2016 the upper limit on tax favoured pension funds will be reduced from £1.25m to £1m. Those with pension funds already in excess of £1m will be offered some form of protection. If you would like any further advice on how the Budget may affect you or your business, please contact Gary Inglis on 020 8551 7200 or at gary.inglis@raffingers-stuart.co.uk

RAFFINGERS STUART RECRUITMENT NEWSLETTER SPRING 2015

Say Hello to CrunchBoards Recently the Raffingers Stuart office has been overcome with talk of CrunchBoards. Software that we predict will change the face of reporting forever. So, what exactly is CrunchBoards? CrunchBoards was designed by business owners for business owners (not accountants). Therefore, we can guarantee that it is for you. CrunchBoards work alongside Xero, providing users with complete clarity of their data. Many of our clients have consequently said goodbye to spreadsheets and have begun to use these boards to visualise and track their financials.

What makes CrunchBoards so valuable is that every transaction from the beginning of time can be imported, which means absolutely any KPI can be looked at in realtime for operational, retrospective or future analysis. And, if anything is amiss you will be the first to know. These boards save time as they can create anything from simple budgets to complex forecasts instantly and in a format that suits you. Ideal for any board meeting.

Sample board: your three month financial projection

The boards are also great for forecasting, helping you create goals that you can analyse and track against. You can even create different boards for different members of your team. Therefore, your employees can track their own expenses and KPIs. Essentially, CrunchBoards give you back control. Through being connected with Xero and its live bank feeds you can log-in at any point and have instant, up-to-date financial information about your agency. Through gaining complete visibility, CrunchBoards can help you grow your agency and become more profitable. If you would like to see what a sample board could look like for your agency, please contact Lee Manning at lee.manning@raffingers-stuart.co.uk. SMALL DETAILS BIG DIFFERENCE

Sample board: your performance v budget

Save Time When Processing Your Agency’s Expenses

Employee Spotlight In this slot we like to introduce you to a valued member of our team, allowing you to put a face to a name. This quarter we are back in our accounts team with Suraj Shah. Name: Suraj Shah Nicknames: Suj DOB: 02 April 1989 Career history: I joined Raffingers Stuart in December 2014. Prior to this I worked for Methods Corporate Ltd as an assistant accountant, dealing with many aspects of the finance function, including sales, purchases, credit control and internal investigations. The experience I gained was crucial to my understanding of operations and the importance of internal controls. Currently, I am also working towards my ACCA qualification. The exposure I am gaining at Raffingers Stuart enables me to put into practice what I have learnt so far, as well as to further develop my skills. Interests: I love football, both watching and playing. I have to admit, I am not very good, although I find it a great and fun way to stay fit. I also would like to live abroad somewhere for a period of time. I have already spent a year in Toronto, where I studied ACCA and carried out an internship with a not-for-profit organisation. Other interests include movies, socialising and eating. Partners Report: Suraj is a new recruit in the accounts team and he has settled in well. He has gained great experience working as an accounts assistant in industry, which comes in handy when resolving our client’s bookkeeping issues. I also hear he is an expert on the badminton court! Suraj is a pleasure to have around the office.

Travel and subsistence expenses are daily occurrences for recruitment professionals. Therefore, it is essential recruitment agencies have a reliable process in place, particularly when it comes to reporting their whole team’s annual expenses. At the end of every tax year agencies are required to report reimbursed expenses and benefits paid to their employees on forms P11D (which have to be submitted by 6 July following the end of the tax year). However, as the expenses incurred by recruiters are commonly routine, non-taxable expenses, such as travel, phone bills and entertainment, you should be making use of dispensations. Dispensations effectively allow you to not report your expenses to HM Revenue and Customs (HMRC) and therefore ensure you will not pay tax and National Insurance on them. Furthermore, you will not need to report the expenses you have a dispensation for on the P11D, which significantly reduces the administration required. Once dispensations have been applied for, they can only be back dated to the beginning of that tax year. Therefore, you only have until the 5th April 2015 if you wish to use dispensations for the expenses of your employees in the 2014/15 tax year. TIP: Do not forget to tell HMRC if anything you have included in your dispensation changes. If you do not, HMRC are within their rights to cancel the dispensation and ask you to pay back any tax you owe. Dispensations can be applied for at any time via the HMRC website. For any further advice or payroll support, please contact Suda Ratnam at suda@raffingers-stuart.co.uk.

RAFFINGERS STUART RECRUITMENT NEWSLETTER SPRING 2015

Recruitment Sector Overview THE FULL STORY

The recruitment sector continues to go from strength to strength. In 2014 the Global Recruitment Market was worth a total of €345.00 billion (an increase of 14 billion). In the UK alone, the sector was valued at £37 billion (2013) and with Net Fee Income (NFI) continuing to grow there does not seem to be any slowing down.

Sectors Currently there are over 9,000 recruitment firms operating in the UK with their key specialisms being:

● IT/Telecommunications: 32% ● Technical: 24% ● Accountancy: 21% However, it is interesting to see when looking at the NFI by sector the movement that is taking place. Business admin, education, legal and marketing sectors continue to grow. Whereas, not only are niche sectors shrinking (pharmaceuticals, blue collar industries) but also the more popular sectors (engineering and Technical and IT and Technology) are too. Furthermore, it is interesting to see that the NFI for the generalist sector is shrinking, suggesting that clients are now favouring specialists. It is predicted that we will see more firms becoming sector specialists or multi-specialists in the year to come.

International The global recruitment market continues to expand at a rapid rate. Out of the 70% of agencies that have UK only offices, 30% plan to open more offices (half of which will be in the UK) and of the 30% that already have offices in the UK and overseas, 50% plan to open more offices with the majority located overseas.

SMALL DETAILS BIG DIFFERENCE

Best Performing Firms ● Net

Fee Income per fee earner is £100,000 for contract and permanent

● Net

Fee Income growth is 20% for contract and permanent

● 20%

of Net Fee Income earners are paid in salary and commission

The general trend seems to be that those with offices already overseas intend to open more offices than those with just a UK presence. Furthermore, the majority of those offices they intend to open are overseas rather than the UK, with the most popular countries being USA and China. Although, if you are considering expanding your offices it is worth noting the time it takes for an office to become profitable. It takes the majority of firms (33%) 18-24 months to become profitable. Only 1% of firms report a profit in less than three months.

So, what does the future hold? ● 59% growing head count ● 52% achieving financial growth ● 45% maintaining or improving financial profitability ● 36% developing a strong management team These statistics were announced by APSCo at our Leading for Growth Seminar in March. If you would like to attend our next event please contact Lee Manning at lee.manning@raffingers-stuart.co.uk. To find out more about APSCo visit www.apsco.org.

Events 2015 - The Story So Far Preparing Your Business for Sale

Leading for Growth in Recruitment

When: Thursday 5 February 2015 Where: HSBC Global Headquarters

When: Tuesday 24th March 2015 Where: HSBC Global Headquarters

Why should you sell? How do you maximise the price of your business? How do you secure and find the right strategic purchaser?

Another successful event for the recruitment sector saw over 30 owners, managing directors and directors of recruitment agencies come together to see how they can transform their teams into ‘growth leaders’, which are essential for any agency looking to achieve collaborative teams, a shared vision and ultimately sustained business growth.

All of these topics and more were covered at another great event held at HSBC. With presentations by Precision Mergers & Acquisitions, the event brought together over 20 business owners. Watch out for our future events on this topic. Key Contact Neil Ackroyd, Precision Mergers & Acquisitions E: neil.ackroyd@precisionmergers.com

Preparing for Your Future - IHT When: Tuesday 3 March 2015 Where: Prince Regent, Chigwell One of our most popular events, which saw over 30 of our clients come together to discuss the complex topic of Inheritance Tax Planning. With presentations by Old Mutual Wealth, a general overview of IHT was given with key discussions on what IHT is and what can be done to reduce its impact. Various solutions were touched upon, including life insurance policies, gifts and bona fide trusts. Key Contact Dharmesh Upadhyaya, Bradbury Hamilton E: dupadhyaya@bradburyhamilton.co.uk

Check out our YouTube channel for all of the videos from our seminars.

Key Contact Lee Manning, Partner E: lee.manning@raffingers-stuart.co.uk

What’s Next? Take Control of Your Recruitment Agency When: Wednesday 29th 2015 Where: Eight Members Club Bank Run your agency and nurture your client relationships like never before with Xero and CrunchBoards. This event will guide you through all there is to know about Xero and its dynamic reporting capabilities, covering: how to get paid faster, managing your cash flow on the go and quick and pain free bank reconciliations. The event will also touch upon: o CrunchBoards - an operational tool providing dynamic, real-time facts and figures so that you can make accurate business decisions o Receipt Bank – no more data entry for receipts and invoices o JobAdder – taking the hassle out of recruitment by managing job orders, tracking candidate progress, fees and forecasting If you would like to attend this event, please email lauren.aston@raffingers-stuart.co.uk. RAFFINGERS STUART RECRUITMENT NEWSLETTER SPRING 2015

Employment Rate ‘Reaches All-Time High’ As part of the government’s helping people to find and stay in work policy Iain Duncan Smith MP confirms the strength of the current UK employment landscape. The employment rate has now hit an all-time record high in the UK, after growing faster than any major economy over the past year. In the final set of official national statistics published in this Parliament, private sector employment and vacancies in the economy have also broken records – with 2.3 million more people in private sector jobs than in 2010, and nearly three quarters of a million vacancies available at any one time. This government has taken action to reform the welfare system, and has seen remarkable success in supporting people off benefits and into work.

The number of people claiming the main out of work benefits has fallen to its lowest level for over 30 years. This government has stuck to the long term economic plan, and now the overall unemployment rate is at its lowest point for more than 6 years. Work and Pensions Secretary Iain Duncan Smith said:

people to seize those opportunities.” Youth employment has risen by more than 110,000 in the past year and youth unemployment has also fallen by around 20%. Excluding those in full-time education there are now 496,000 unemployed young people. Overall employment figures: ● Record private sector employment of 25.5 million (up 2.3 million since 2010) ● Record employment rate (73.3%) ● Record vacancies (735,000 at any one time) ● Record 30.9 million people in work ● 98% of the annual rise in employment came from those working as employees (rather than self-employed) ● The number of people claiming one of the main out-ofwork benefits is the lowest level since 1982 ● Number of women in work and female employment rate are both at record highs (14.48 million and 68.5%) ● Total worklessness down by more than 1.1 million since 2010 ● Lowest unemployment rate since May to July 2008 (5.7%) ● Total private sector pay up 2.1% over the past year

“This is a remarkable set of figures, which underlines this government’s success in backing businesses to create jobs, and supporting British

The number of people in jobs increased by more than 600,000 over the last year – an average of more than 1,600 every day. This is good news for the future of the recruitment sector.

Technology Companies Surging in Popularity

surging in popularity as a sector to work within, with just under a third of all respondents saying that they view it as an attractive career path, the highest proportion for three years.

According to Randstad Technologies, IT and Telecoms companies are becoming one of the most desirable employers.

In 2013, just a quarter (26%) of those interviewed said IT and Telecoms was an attractive sector in which to work, but in 2014 that rose to 28% and this year it hit 30%.

A survey of 10,728 Brits – carried out as part of the annual Randstad Award – found that, for the fourth year running, the automotive industry was perceived as the most attractive sector to work in.

Ruth Jacobs, managing director of Randstad Technologies, commented, “The sector is thriving helped by the highprofile development of tech clusters in the UK including Shoreditch’s Silicon Roundabout – which have made the IT sector seem a much ‘cooler’ space to work in.

However, the research also revealed that IT and Telecoms is SMALL DETAILS BIG DIFFERENCE

partner perspective

What Accountancy Software is Best for You? With over 30 years of experience Lee Manning has seen many pieces of accountancy software come and go. Here he reviews two of the most popular pieces of software today. Let’s get to it, in your opinion, what is the best accountancy software? If you asked me this question a few years ago, the answer would be notably Sage 50. Sage 50 has been around for a long time and so everyone is trained on it, as a consequence we, as accountants, feel more confident recommending the software. However, in the last two years Xero has completely changed the way we think. It is extremely easy to use, which has resulted in more and more of my clients moving to the software, slowly outnumbering those on Sage 50. What has brought about this change? Advances in technology. Everyone now has a mobile and/ or tablet; therefore, with Xero being on the cloud and mobile compliant, it is more flexible and fits in with today’s lifestyle. There are also numerous add-ons that can be used alongside Xero and it is constantly evolving. Just last month it was announced that payroll can now be processed through Xero. This feature includes instant RTI reporting to HMRC and is auto enrolment compliant. What would you define as the key benefits for each? With Xero it is without doubt the fact that it can be synced with live bank feeds. This means that the data is instantly up-to-date with minimum effort required. My clients love the fact that they can log-in to the system at any time and on any day and have instant access to their figures. Sage 50 on the other hand is the industry standard. It has been around for a long time and so has a pronounced reputation in the industry; I know it is used by many

agencies based on this fact alone. How about the limitations? Xero has a very user-friendly dashboard, which means no experience is really needed. With the in-depth training videos anyone can pick up the software and get started. However, this does mean that a lot of larger companies with in-house bookkeepers do not see the need for it. Although, saying that; already I have a client with a £5m turnover that absolutely loves Xero and moved away from Sage, saving them hours in processing time every day. Sage 50 is slightly more complex. To make the most of it I would suggest you need bookkeeping experience, which is why I recommend this software to larger clients that have the bookkeeping capabilities in-house. What is the best ‘add-on’ / ‘bolt-on’? Without a doubt, it has to be CrunchBoards with Xero. It has the ability to organise data into visual graphs and tables to allow for KPIs to be monitored, instant analysis of data and accurate forecasting. It does all of this at the click of button, using the live data from Xero and the agency’s bank feeds. This means any director; trustee or manager can see the information they need, without the timely process of collecting and downloading the latest data and inputting it into Excel spreadsheets. So, which piece of software do you recommend? As with anything, it all depends on the individual client’s needs and capabilities. Sage 50 has the reputation. However, more and more I find myself recommending Xero as the capabilities of the system are constantly expanding. All I can say is, watch this space. Lee Manning, Partner lee.manning@raffingers-stuart.co.uk 020 8418 2662 RAFFINGERS STUART RECRUITMENT NEWSLETTER SPRING 2015

Head Office 19-20 Bourne Court, Southend Road, Woodford Green, Essex, IG8 8HD Tel: 020 8551 7200 Fax: 020 8551 0912 Email: info@raffingers-stuart.co.uk London Office 3rd Floor, 5-10 Bury Street, London, EC3A 5AT Tel: 020 7167 6880 www.raffingers-stuart.co.uk facebook.com/RaffStu

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