Taxing Perks and Interpreting Statutes: Pepper v Hart
There are two kinds of perks: the licit and the illicit.' Licit perquisites can take a variety of forms: the company car, private health care, cheap loans, the use of assets owned by the employer, and subsidised travel and accommodation. They also offer a variety of advantages. From the employee's perspective, such perks represent (since tax is payable on them) the purchase of benefits which they might otherwise be unable to afford, or afford only at a cost to their disposable income that would require saving elsewhere. From the employer's perspective, it is often more cost effective to provide a perk than an increase in salary that would, after tax, allow the employee to purchase the perk in the retail market. This is especially so where the employer wants the employee to have the perk, for example the cottage on the estate whose responsibility it is for the employee to maintain,2 in order to do the job. Employers can buy in bulk and may, as in the case of fleet purchasing of company cars, be able to exert considerable leverage on motor manufacturers and traders.3 Another significant saving for employers is the provision to their employees of the service which they are in the business of providing; what Nicholls LJ (as he then was) in the Court of Appeal referred to as 'in-house' as opposed to 'external' benefits.4 Air and rail travel, and places at public schools and the like, are good examples. Employees can be given free or reduced cost access to a service which the employer has presumably costed on the basis that it is the non-employee user who is paying. A train has to travel from Cardiff to London: the addition of a few non-paying BR employees as passengers does not on the face of it affect the cost to BR of providing that service to the general public. The teachers at a public school as in Pepper v Hart,5 which is the focus for this comment may have the opportunity to place their children there at a cost which is marginal to the school, but is, of course, a considerable saving to them. Perks have traditionally been used as the means for increasing an employee's total remuneration (and for distinguishing grades of employee) but without