The last 18 months have seen some of the most significant demand in tax recruitment that I have experienced in my 15 year career. As many of you will have experienced from your own day to day roles, and from hiring in to your teams, the demands placed upon tax functions and their subsequent value to organisations have dramatically increased. Earlier this year, we released our Tax Salary Survey, which identified pay increases across all areas of tax and at all levels. The demand for talent at Newly Qualified to Senior Manager levels has been well documented but, for our Heads of Tax Journal, we wanted to examine the drivers for the material pay increases that we have seen at the more senior end of the market and look more closely at the structure of typical remuneration packages in different roles.
Why has demand increased?
I certainly don’t need to tell you that there is an increasing compliance burden, lots of finance transformation, and that the tax professional is now expected to be a business partner to operational stakeholders. These changes have been going on for years, and many of you will have experienced this first hand. It is clear that role of tax has changed, and that many functions are too lean to cope with it. Similarly, there have always been too few tax professionals in the market, which goes some way to explaining the 20%+ differential in earning potential for Newly Qualified tax professionals versus their peers in audit. Whilst a lack of available talent and the increasing demand for these professionals has had a typical supply versus demand impact on compensation, there are three key areas that have turbocharged earning potential.
The biggest drivers of demand have been:
The uncertainty of Covid and the lockdown period ensured many Heads of Tax stayed in roles that they would have otherwise left. With the economic future so bleak, candidates looked to benefit from the employment rights of longer service. Then with the end of lockdowns, candidate confidence increased materially and we saw pent up demand for a move spill over. We also saw an increase in retirements. This resulted in ‘churn’ in the market, with roles becoming available after the departure of a long serving Head of Tax.
“In fact, we saw roughly 10% more moves in the FTSE during 2021 and in to 2022 than we would normally see.”
The volume of deals funded by private equity money has also proved instrumental. There have been a host of carve outs from existing groups, with a need to build new tax teams for the departing business as it looks to stand on its own. The remuneration levels of these roles are also very competitive, with an eye on a future event giving the potential to earn significant amounts from share awards. The anticipated value of these options is being considered before a prospective move, and is increasing wage expectations amongst the candidate community.
Finally, we have seen a host of businesses make the decision to hire their first time Head of Tax. As the economy has spiked, so too have the amount of groups whose growth ambitions have increased the level of tax risk that they are exposed to.
All of this has had a significant impact on remuneration and how it is structured.