VAT charge to hurt temp supply to key industries

Plans to add VAT to the wages of temporary social care and charity workers, locum doctors and financial services staff will lead to a significant fall in the use of agency staff, according to a new study.

The Recruitment Employers Confederation has warned that the government has ‘grossly underestimated’ the costs involved.

The measures, which come into effect in April 2009 and scrap the concessions to agencies providing temporary workers to industries with a zero rate of VAT, should put £125m a year in the Treasury’s coffers. However, the REC has estimated the cost to be at least £400m, The Telegraph reports.

Further reading:

Scrapping zero VAT rate will help poor families, says IFS