There are signs the bonus tax is suppressing hiring

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On one hand, things are looking good: according to Morgan Mckinley, the number of new jobs coming onto the market in January 2009 was up 60% on January 2008.

However, Morgan McKinley's estimates apply mostly to the middle and back office, where its business is focused. Headhunters tell us the picture isn't nearly as rosy when it comes to hiring in the front office.

"There's a bit of an impasse at the moment," says one senior equities headhunter. "Banks are unwilling to bring someone onboard before April because of the 50% bonus tax. In April, we're expecting hiring to restart."

"There's a lot of caution," confirms Lee Thacker, head of the markets business at search firm Sheffield Haworth. "A lot of banks are delaying their recruitment. The bonus tax means it's difficult to get sign-off for hires internally. If anything, volume hiring is down on this time last year."

Sophie Dworetzsky, a partner at law firm Withers, confirms that the UK's 50% tax will be levied on guaranteed bonuses offered to new hires before April 5th. Even if sign-ons aren't actually paid before April, the tax becomes liable if a new hire signs a contact promising a guarantee, or buyout, during this period.

As a result, it may be April before many senior contracts are signed - and July before new hires are brought on board, once notice periods have elapsed.

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