Charities cut temp staff to cover extra VAT costs

Charities have slashed the number of temporary staff they hire as a result of having to absorb extra costs since the government changed rules on VAT earlier this year.

A study of 170 charities found that 41% had reduced the number of temporary staff taken on since 1 April, when the government ended the concession for recruitment agencies to charge VAT only on the commission they charged. Instead, VAT must now be charged on the overall cost of the booking.

Three-quarters of charities said that changes to VAT on employment costs had affected their use of temporary workers.

The study, carried out by recruitment firm TPP NFP, found office support, finance, fundraising, marketing, communications and facilities to be the worst affected areas.

Jayne Morris, TPP NPF chief executive, said: "With jobless figures continuing to rise, our experience in the past has been that many people often rely on temp work to help them through until they secure a permanent role.

"At a time when the government is looking to get people back into work, its new VAT legislation is having the opposite effect. It is not just charities that are being hit, as any employer looking to take on temporary staff via an agency will be affected."