Direct Tax Market Report Q1 2022
As the war for talent rages on, salaries have exceeded our expectations tenfold this quarter. In practice, we’ve seen Tax Manager annual salaries coming in at £80K (plus cash bonus’ and other benefits). This benchmark may be common in fields like R&D, but in more traditional corporate and international tax teams, it’s quite an eye-opener.
Talent retention has been a key focus for employers over the course of Q1. A phrase dominating the industry is ‘the great resignation’, yet in tax, the stats do not indicate this sweeping statement reflects the reality on the ground. Yes, retention levels dipped in many firms. The average attrition rate pre-covid across the top 10 firms in the UK was between 13-17% (around 15-20% in the Big 4). For a short period, this did increase to 17-24% but soon reverted back.
One contributing factor to this reversion may be the introduction of a more relaxed approach to professional qualification exam failures, with some firms scrapping the "two fails and you’re out" policy (not a bad move in our opinion). Flexibility in working patterns has also become a necessity rather than a luxury. If you’re not offering at least 50-50 WFH/office-working options, at all levels, you’re lagging behind.
The sectors in demand and why?
It’s no surprise that corporate tax roles have dominated the direct tax market, however, transfer pricing and employment tax also deserve an honourable mention.
Corporate tax: Increased profits, aggressive growth plans, and demand for tax services are the main driving factors behind our portfolio having over 80 professional services CT positions. With plenty more opportunities out there, it’s a pretty good time to be a corporate tax professional. Many firms are offering a far more varied workload, such as carving out more advisory focused positions for junior hires. Salaries are on the up as well as the opportunities for progression. Candidates, the market is in your hands. Across the industry, there have been hundreds of new positions advertised across multiple industries. Financial services roles have been most frequent, with technology, e-commerce and manufacturing close behind.
Transfer pricing: At the beginning of 2021, we observed a slump in hiring in this area, but in the latter half of the year there was more movement in the TP arena than any other direct tax sector. It seems some firms have lost their top talent, whilst others have gained. A contributing factor could be that law firms have increasingly sought after great people in this area, whilst paying around 25-40% more on salaries. In-house TP execution roles are plentiful, whilst we’ve also seen a few TP policy positions which are highly sought after for those active on the market. Like CT, the FS sector has had the lion's share of positions.
Employment Tax: Although the number of positions opens in this sector is far fewer than others, the top 20 firms are scouting Employment Tax Managers right now, with many postings being open for months. Some Tax Partners we’ve spoken to have noted they’ve had to turn new client work down due to not having the resources to cover it. What does this suggest? There’s simply not enough talent or incentive out there for those in this sector to make a move. If you’re in the market, be aware of interview fatigue, because there will certainly be interest in you!
Q1 is consistently busy in normal times, the firms with the most flexibility and generous salaries are the ones winning at this recruitment game right now. Note that employer hiring patterns are now becoming more flexible in terms of experience, so if you’ve got solid experience in an area of tax but don’t quite tick all the boxes, many top 20 firms would still be very interested in your profile.
Please note private client taxes haven’t been covered, simply because there hasn’t been a huge drive in this area during Q1. Traditionally, Q2 & Q3 have shown recruitment drives, so watch this space.
Ed Moore is a Senior Consultant in the Tax Division at Harvey John.
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