15 October 2008

Dear Sir/Madam

I wish to bring to your attention the recent States Resolution on the taxation of benefits in kind through the Employees Tax Instalment (“ETI”) Scheme.

With effect from 1 January 2009, it will be necessary for all benefits in kind to be subjected to deduction of tax under the ETI Scheme in the pay period (for example, weekly or monthly) in which the benefit was provided to the employee.  There may, therefore, be a requirement for payroll software to be capable of including what may be remuneration other than in the form of cash as part of the payroll operation and to deal with the allowance of a certain level of exemption.

You may wish to consider whether the software you provide to your customers will be compliant with the new Regulations, with effect from 1 January 2009.

A copy of the letter being issued to employers is attached for your information.

I should point out that the above changes also apply when calculating the gross wage for Social Security contribution purposes.

If you require any further information regarding the taxation of benefits in kind through the ETI Scheme, please do not hesitate to contact the ETI Section of this office on 740440.

Yours faithfully

R GRAY

Administrator