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Hays expects big hit from UK tax changes in April

The new legislation is expected to halt temp activity in the private sector, while foreign exchange hit accounts by £3mln in a month

Hays PLC - Hays expects big hit from UK tax changes in April

Hays PLC (LON:HAS) is bracing for a halt in private sector temp activity when changes to the UK tax rules for contractors come into force in April.

The reform will bring the private sector in line with the public, cracking down on a tax loophole used by self-employed professionals operating through a company.

In the six months ended 31 December, turnover rose 2% to £3.1bn for profit before tax down 22% to £95mln. Cash at the end of the period was 12% lower at £103mln.

The recruiter said recent volatility is “a clear sensitivity” to full-year performance, with foreign exchange hitting profits by £3mln just over the past month.

READ: Hays blames UK election, Aussie bushfires and French strikes for quarterly fee contraction

The FTSE 250-listed company plans to cut costs by £5mln in the second half of the year following an overhead review.

The firm said it is too early to quantify the impact of coronavirus and added the New Year 'return to work' in the temp and contractor markets was 2% below prior years, as its key regions – Australia, Germany, UK – remain “difficult”.

Analysts at Liberum said that a rebound is possible "reasonably quickly" in all markets other than Germany, as the December deterioration was due to the French general strike, the Australia bushfires and the UK election.

However, Berlin remains an issue due to a reduction in worker volumes and average hours clients in the engineering, automotive and financial services industries.

Shares dipped 1% to 160.4p on Thursday morning.

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Quick facts: Hays PLC

Price: 114.6 GBX

LSE:HAS
Market: LSE
Market Cap: £1.92 billion
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