RAFFINGERS STUART RECRUITMENT NEWSLETTER WINTER 2014/15
INDUSTRY BULLETIN
RECRUITMENT
Recruitment Industry Network
Rewarding Employees Tax Efficiently
Hospitality Recruitment up 18%
Read highlights from the launch of our new network.
Can PAYE Settlement Agreements work for you?
Recruitment levels in the hospitality industry continue to grow.
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Contents
Welcome and Partners
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Special Feature Recruitment Industry Network
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Recruitment Benchmarking Report 2014
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Share Incentives for Key Employees
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Employee Spotlight
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Benefits of Incorporating Your Agency
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Rewarding Employees Tax Efficiently
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Autumn Statement Measures Affecting the Recruitment Industry
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2015 Event Agenda
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Hospitality Recruitment up 18%
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Placements and Salaries Continue to Rise
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Partner’s Perspective ‘Tis the Season for Tax Returns
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PP SMALL DETAILS BIG DIFFERENCE
Welcome to our RECRUITMENT WINTER Newsletter We hope you have had an amazing Christmas and New Year! In this second edition of our newsletter we share with you the highlights from our first ever Recruitment Industry Network event, which took place in November 2014. We also feature articles on Share Incentives for Key Employees and Rewarding Employees Tax Efficiently, both of which discuss initiatives to help agencies recruit and retain high calibre employees. With one of the key obstacles faced by the recruitment industry being revealed as a lack of quality employees (Raffingers Stuart Recruitment Benchmarking Survey 2014) we thought these might be of particular interest. In this edition we also bring you a brief summary of the Autumn Statement from George Osborne and the ever popular Partner’s Perspective feature, which this month puts Adam Moody in the spotlight. We hope you enjoy reading our newsletters. 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.
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
We wish you all a wonderful and successful 2015! The Partners at Raffingers Stuart
Barry Soraff Partner barry.soraff@raffingers-stuart.co.uk
Paul Dell Partner paul.dell@raffingers-stuart.co.uk
RAFFINGERS STUART RECRUITMENT NEWSLETTER WINTER 2014/15
Recruitment Industry Network SPECIAL FEATURE
On Tuesday 2 November 2014, we held our first ever Recruitment Industry Network event. We would like to say a big thank you to all of those that attended. Located at the HSBC Global Headquarters the evening was a great success, bringing together over 30 professionals.
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Following a brief introduction from our Partner, Lee Manning, Liz Banks, Director of Communications and Research at The Recruitment and Employment Confederation (REC), took to the stage to discuss their Recruitment Industry Trends Survey 2013/14, which unleashed some interesting statistics:
2013/14 the UK recruitment “ Inindustry surpassed the prerecession peak! “ ● In 2013/14 recruiters helped over 634,000 people find a job ● Turnover from permanent business increased by 8.7% and temporary placements by 8.2% ● The top three industries being recruited for were secretarial, accounting/financial and IT ● The number of people working in the recruitment industry has grown by 2.9% ● Top concern for recruiters sourcing for permanent roles - shortage of candidates with appropriate skills and experience ● Top concern for recruiters delivering temporary/ contract labour - compliance and regulation
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● 2013/14 saw the turnover value per temporary worker average £22,523 (an increase of over £1,000) These statistics are all extremely promising for the recruitment industry. However, to maintain and improve upon these figures it is important that the industry continues to evolve. Ricky Martin, Managing Director of Hyper Recruitment Solutions and the 2013 Apprentice Winner, noticed just that and enlivened the stage with his presentation on New Age Recruiting. Part of Ricky’s presentation focused on the importance of social media and why it should be taken advantage of - it is the world’s largest database, it is a cost effective platform and it holds the future talent pool. However, Ricky also warned of the dangers of social media. In Ricky’s view, one of the biggest threats the recruitment industry now faces is ‘The Death of the Telephone’. With social media becoming more popular recruiters are picking up the telephone less and less, which is a huge barrier if they wish to build relationships to ultimately place more
Average response time to an email? 72 hours. Average response time to a telephone call? Immediate.
people. It was surprising to learn that 38% of recruiters use InMail, 30% use connection requests, 21% use Email. Yet, only 6% use the phone. Indeed, social media needs to be taken advantage of, but that should not come at the cost of the telephone. It is therefore necessary for recruiters to ensure they are making the best out of all resources available to them. The telephone is essential for building those personal relationships and getting responses instantly. To watch the highlights of our event, please visit our website: www.raffingers-stuart.co.uk
Recruitment Benchmarking Report 2014 The Recruitment Benchmarking Report 2014 is now available. Following our benchmarking survey that was sent out to over 1000 recruitment agencies in October 2014, we have published all of the results in a report that is now available on our website: www.raffingers-stuart.co.uk/sector/recruitment The aim of the survey was to obtain an in-depth understanding of the recruitment market. We hope that with the results recruitment agencies can benchmark themselves against their competitors, as well as make informed decisions about the future of their business. The results of the survey are extremely encouraging with 91% of respondents recording an increase in turnover in the last 12 months, and a further 91% predicting an increase in turnover in the next 12 months.
This event marked the beginning of our Recruitment Industry Network, which will see us hold quarterly events next year with HSBC, bringing together more professionals in the industry to discuss the most pressing matters. The dates of our 2015 seminars will be launched in January 2015.
If you would like to be the first to hear about our recruitment events, please contact Lee Manning at: lee.manning@raffingers-stuart.co.uk
As revealed by the REC’s Recruitment Industry Trends Survey, the biggest obstacle faced in the recruitment industry at the moment is a lack of quality employees. In an attempt to overcome this hurdle and retain and recruit high calibre employees, many agencies are offering bonuses as their key incentive, with the average commission structure being 30% of revenue produced. If you would like to see a copy of the full results, which include statistics on personal remuneration, bookkeeping and accounts and cash flow, please request your copy via Lee Manning at, lee.manning@raffingers-stuart.co.uk.
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Share Incentives for Key Employees According to our Recruitment Benchmarking Report 2014 one of the key problems faced in the recruitment industry is the lack of quality employees. One initiative that is proving popular in counteracting this challenge is share incentives. Share incentives are a cost effective initiative our clients in the recruitment sector are finding useful in helping them recruit quality employees. This is essentially because they allow their agency to offer something different from their competitors, helping them to stand out. Share Incentives are also a tax efficient way for agencies to motivate and retain their key people. We particularly like the Enterprise Management Incentive (EMI) scheme. It is the most tax efficient share incentive available (and is approved by HM Revenue & Customs). 5
In short, the scheme allows your employees to purchase shares of the company in the future at a price agreed by you at the time. Clear terms can then be set for the incentive, so shares can be bought when your employees have achieved certain objectives, or worked with your company for a set period of time. The only charge applied is to your employees through capital gains tax. This can be up to 28% on any increase in share value from the date of the scheme offered until the shares are bought. Your agency will then be entitled to a corporation tax deduction for the amount of growth. EMIs were initially introduced to help smaller companies incentivise and retain their key employees, as well as enable them to stand out from the crowd and recruit new, high calibre employees. Now the scheme is being used by companies of all sizes. To qualify for the scheme your agency must be independent, trading and have maximum gross assets of no more than ÂŁ3 million. For your agency to then qualify for the tax saving, you must ensure that the incentive is SMALL DETAILS BIG DIFFERENCE
only used for recruiting and retaining employees, not as part of any agreement.
Top Three Recommended Share Schemes: 1. Enterprise Management Incentive (EMI) 2. Company Share Option Plan (CSOP) 3. Save As You Earn Schemes (SAYE)
For further information on EMI, or for help setting up a share scheme, please contact Barry Soraff at barry.soraff@raffingers-stuart.co.uk.
Benefits of Incorporating Your Agency Incorporating your agency into a limited company is a big decision. However, it is one that is definitely worth considering, especially if you are generating a profit.
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 it is our Tax Senior, Reshma Johar. Name: Reshma Johar Nicknames: Resh DOB: 22 November 1984 Career history: I have gained tax experience from Big 4, Top 50 and boutique practices and have also gained my ATT qualification. I joined Raffingers Stuart in July 2014 as a Tax Senior and am enjoying gaining great exposure into various tax issues and working alongside a friendly and supportive team. I am also working hard towards gaining my CTA qualification. My experience to date has enabled me to provide help and support to both my colleagues and clients by providing tax advice in a clear and concise way. Interests: As I turned 30 recently, I bought myself a skateboard and so try to practice on a weekly basis, my aim for the new year is to go to a skate park and not embarrass myself! Just in case that was not enough thrill seeking, I have also booked some flying lessons for the new year. I also try to make sure that every year I get to do a bit of scuba diving as exploring the sea is another passion, so far I have had the pleasure of meeting an octopus, scorpion fish, puffer fish and a turtle! Partners Report: Reshma is a new recruit in the tax team and she is settling in very well. She writes many of our tax news items and blogs, which we cannot thank her enough for. I hear she is an expert with a paint brush and is not afraid to get her hands dirty in the DIY department. Reshma is a pleasure to have around the office.
With non-registered agencies, the business owners are taxed directly, having to pay income tax, which can be as high as 45%, and National Insurance. However, with limited companies: 1. The corporation tax rate is generally much lower than the personal tax rate; 2. Agency owners and directors have the option of paying themselves a combination of both salary and dividends, which is taxed less heavily; 3. If you are setting up a limited agency with a spouse or partner, there is always the option to split your income, which can save even more tax. What is more, among the above key tax saving benefits, limited companies also get access to more funding opportunities and incentives, among these are: â—? Pensions. Limited companies can make contributions for all of their directors and employees, which can cut down National Insurance contributions; â—? Employee Incentives. Limited companies have the option of incentivising and retaining key employees through tax efficient share schemes, such as the Enterprise Management Incentive. We always advise non-registered agencies to annually review whether it is more beneficial to them and their business to be limited. For further advice please contact Paul Dell at: paul.dell@raffingers-stuart.co.uk
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Rewarding Employees Tax Efficiently With a successful team and the buzz of a sales environment, celebrating successes or rewarding employees on business wins become more and more frequent. You may also find that you are trying to find new ways of rewarding your employees for different types of successes. With this in mind, it is important to know what the tax position would be during such times.
If you were to reward your employees with vouchers or hampers for example, these would be taxable benefits and tax would be payable by the employee. On top of this a P11D return for each employee rewarded would also be required, resulting in an increase in administration. Another Option… PAYE Settlement Agreements (PSA)
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This is a great way to provide certain expenses and benefits to your employees without them bearing the cost of tax (PAYE) and National Insurance (NI). Instead you the employer will settle the PAYE and NI. Items that you could include are: ● Employee entertaining ● Gifts to employees, for example birthday presents, anniversary gifts, get well soon etc.
2. Once agreed with HMRC an annual calculation is carried out, which will report the agreed items (VAT inclusive) incurred in the tax year
● Employee incentive schemes, for example childcare vouchers
3. Tax and NI (Class 1B) will be applied on a ‘grossed up’ amount
● Cost of Christmas parties and similar entertainment
4. The calculation and payment is due by 19 October following the end of the tax year.
● Other small items, such as mobile phone bills recharged to the business (where the phone line is not registered in the business name and there is a fixed element to the cost) For an item to be covered by a PSA the expense must be for minor items, irregular items or items that are difficult to quantify. How does it work? 1. Discuss the types of expenses you would consider within a PSA SMALL DETAILS BIG DIFFERENCE
This is also a great tool to use where items, such as vouchers, have been missed of the P11D forms and so can be included within the PSA.
For further information contact Andrew Coney at andrew.coney@raffingers-stuart.co.uk
Autumn Statement Measures Affecting the Recruitment Industry The Autumn Statement 2014 released some interesting proposals, not least of which was the announcement that the government would be reviewing the use of overarching contracts of employment (OAC) by employment intermediaries in the temporary labour market. The government plans to level the playing field between agencies that misuse the tax rules and those that do not. They also plan on improving the information available to individuals so that they can make informed decisions when entering into OACs and therefore do not enter into arrangements that are not beneficial to them. So, what is the government’s plan of action for combatting tax avoidance through OACs?
2015 Event Agenda In 2015, in addition to our Recruitment Industry Network events, which we will be holding quarterly, we will be launching a whole range of events and seminars. If you are interested in attending any of these, please contact lauren.aston@raffingers-stuart.co.uk. Grooming Your Business for Sale When: Thursday 5th February 2015 If you are considering selling your business these seminars will help you prepare successfully, ensuring you gain the maximum possible price and avoid the common mistakes many businesses make.
Tax Changes From 2016-17 the government is introducing a new tax exemption for certain expenses incurred by an employee and reimbursed by an employer. As a result, the employers will no longer have to complete P11Ds or apply to HMRC for the use of a dispensation. However this new tax emption will not apply if the payments are made through salary sacrifice schemes: â—? The most common way for expenses to be paid instead of salary (rather than on top) is through salary sacrifices. However, from April 2016 this will no longer be possible as the government announced that NICs relief will no longer be available on expenses that are given under a salary sacrifice arrangement
Planning for the Future - IHT When: Tuesday 10th March 2015 The easiest and most effective way to protect your wealth is to plan ahead. One Page Plan When: Spring 2015 Find out how to make the Business One Page Plan pay off for your business.
Tax Relief for Travel Expenses
Film Screening and Networking
The government is currently reviewing the tax rules for travel and subsistence expenses with the aim of modernising these rules to reflect contemporary practices in the labour market.
When: Spring 2015
These are just a few of the proposed changes, a full summary is available on our website www.raffingers-stuart.co.uk/blog.
This event will bring together like minded investors to discuss the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS). Annual Charity Golf Day
If you would like further information on these changes, please contact Lee Manning at: lee.manning@raffingers-stuart.co.uk
When: Wednesday 16th September 2015 What it says on the tin. Held at Toot Hill golf course, our golf day is open to everyone, from amateurs to pros.
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Hospitality Recruitment up 18% A recent report from Caterer.com, revealed that recruitment levels in the hospitality industry have continued to grow over the past year. The company now has over 150,000 jobs advertised on its site, an 18% growth when compared to the same figures last year. Furthermore, in the last three months alone there have been 8% more jobs advertised since Q2. These findings were made in Caterer.com’s Hospitality Employment Index, which also revealed positive news on salaries in the industry. The share of salaries advertised over £30,000 has increased by 31%, and the salaries for entry level roles have seen an increase by 20%. Neil Pattison, Sales Director at Caterer.com declared:
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“Our data reveals ongoing positive trends in the industry, with the number of jobs advertised continuing to remain strong. What’s really encouraging is the growth in share of higher salaries in this sector, and the increase in pay for entry level roles. At the same time, we’re seeing high demand for managerial staff, highlighting the need in the
Placements and Salaries Continue to Rise According to the latest report by The Recruitment and Employment Confederation and KPMG, placements and salaries are still rising, although at a slower pace. The report shows that in October, permanent employee placements continued to rise for the 25th month running. Although, it did grew at its slowest rate since November 2013. Similarly temporary/ contract placements followed the same pattern, seeing an increase in placements for an 18th consecutive month, yet witnessed the slowest growth since June 2013.
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industry to continue to attract people into the sector and develop good talent to help us create the managers of the future.” The quarterly Hospitality Employment Index report from Caterer.com is available to download at: www.Caterer.com/HEI. This decline is said the be the result of the number of available vacancies being at a one month low. October also saw slower rates of employee pay, with permanent employee salaries increasing at the weakest rate since February 2014. However, temporary/ contract employees did not get off so lightly, with salary growth easing to a five month low. Finally, the report revealed that candidate availability is falling, with recruiters struggling to find suitable employees for all vacancies. The promising news is that the recruitment industry is still strong and has not witnessed a major decline. However, with fewer vacancies available now is not the time to get complacent.
partner’s perspective
‘Tis the Season for Tax Returns It is that time of the year again when ours and our client’s time is occupied with frantically completing and submitting self-assessment tax returns. The paper tax return deadline has been and gone, but you still have until 31 January 2015 to submit your return online. With the deadline getting closer, it is now time to seriously think about your tax return, if you have not already. (That is if you want to avoid a £100 late submission penalty.) A few tips... In order to submit your return online it is essential you register for online filing. You can do this personally, or we can do this for you. Either way, registration needs to be done now. In 2013, HMRC were taking up to six weeks to register people for self-assessment. Therefore, the longer you leave it before taking action the tighter the deadline will be for completing your return and in the most extreme circumstances the deadline may be missed all together.
are filled out correctly and on time to avoid any late filing penalties. To make this process as efficient as possible our team is on hand and can complete your returns for you, should you wish, guaranteeing that they will be submitted before the deadline. DEADLINE - 31 JANUARY 2015 This is the final deadline - all tax returns must be submitted online by midnight on the 31 January 2015. Also, note that 31 January 2015 is also the deadline for you to pay any outstanding tax you owe from the 2013/14 tax year. If you do not pay any outstanding tax by this date you will incur a 3% interest charge on the outstanding amount. In addition, there will be a 5% penalty surcharge if the payment is not made by 1 March 2015.
Adam Moody Partner adam.moody@raffingers-stuart.co.uk
Once registered, it is then important that your returns RAFFINGERS STUART RECRUITMENT NEWSLETTER WINTER 2014/15
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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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