Jersey Employers Warned To Prepare For New Perks Tax

by Jason Gorringe, Tax-News.com, London

15 April 2003

PricewaterhouseCoopers has been holding a series of seminars for Jersey businesses regarding the new perks tax which is being introduced in January 2004. The accounting firm fears that many employers are not prepared for the new tax, and is advising them to start planning now to avoid repercussions later on.

'In theory they have eight months, but the tax will have to be taken into consideration in pay reviews and new remuneration packages which could need to be drafted in the next few months,' Rob Brown, senior tax manger at PwC, told the Jersey Evening Post.

The new tax will cover any work related non-cash benefit received by an employee and will include company cars, holiday vouchers, accommodation, bills paid and domestic staff. Certain exemptions are permitted, such as company pension scheme contributions, pool cars, crèche facilities, mobile phones (although not for personal calls), car parking and interest-free loans. The first £1,000 of taxable benefits will also be exempt.

Brown told the JEP that firms will need to gather a lot of information in order to properly calculate the tax, and this will mean having the appropriate recording systems in place. For example, employers will need to establish the difference between how much a company car is used for business and non-business purposes. If a car is used 75% or more for business, then it will attract a lower rate of tax. The employer may also have to value accommodation provided to employees if it is not on the open market, and then calculate the best method of assessment.

In summary, Brown suggested that the new tax will fundamentally change the way employees in Jersey are paid, and could lead to firms offering increased cash perks instead of the more traditional benefits.

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