Disciplined Budget Should Cement Growth and Create New Opportunities for Recruiters

By Ben Farber, Senior Policy Adviser

This was not a radical budget – savings and pensions reforms excepted – but it was a budget for business and workers alike, with focused measures that will bolster job creation, shore up growth in major UK employment sectors and ensure work pays for individuals of all income levels.

Key announcements included:

The doubling of the tax-free annual investment allowance to £500,000. This measure has also been extended through to the end of 2015. That £500,000 could outfit a few new office branches for any agency looking to grow, and will also help your clients with their plant and machinery costs, freeing up more money for new staff.

£7 billion package of measures designed to reduce energy costs for UK manufacturers and new home building initiatives.  This will help to boost global competitiveness and keep jobs in the UK. Any measures that stimulate growth and job creation in high volume sectors like construction and manufacturing are measures that are ultimately good for the recruitment industry.

Further investment in STEM skills and apprenticeships. This is always good news from a skills shortage perspective. For life sciences and other high-tech recruiters, the combined £106 million investment in cell therapy manufacturing, graphene and “big data” will also be of interest. Doubtless these measures will drive demand for some very specific candidate skill sets.

Increase in the personal allowance to £10,500 from April 2015. Every worker, candidate and jobseeker will welcome the tax cut that helps ensure work pays. The question for the government now is whether to start exploring similar increases in the threshold for national insurance contributions for both workers and business.

National Insurance Contributions. The Employment Allowance kicks in from 6th April this year, giving all businesses a £2,000 discount on their employer contributions. In 2016, Class 2 NICs for the self-employed will move to a self-assessment system, a  sensible measure that should bring real benefit to those working piecemeal jobs and those earning below the current £5,725 threshold - particularly self-employed women who earn, on average, 40% less than self-employed men.

Travel and subsistence.  Buried deep within the budget itself is a reference to a planned government review on “the rules underlying the tax treatment of travel and subsistence expenses”. We know HMRC expect a surge in the use of PAYE umbrellas following the onshore changes and this review into travel and subsistence could well be the start of the next phase of a broader crackdown on labour supply models that seek to reduce tax liabilities. It’s an area the REC will be looking at closely over the rest of this year.

You can download all the budget 2014 documents from the treasury website.

For further information on ongoing REC campaigns go to www.rec.uk.com/news-and-policy/policy-and-campaigns