PR wages may rise as PRP phases out

Accountancy firm Arthur Andersen has warned that PR agencies could be hit by the phase out of tax relief on profit related pay (PRP).

Accountancy firm Arthur Andersen has warned that PR agencies could

be hit by the phase out of tax relief on profit related pay (PRP).



A report published by Arthur Andersen this week warns that many

employees are unaware of the impact the phasing out will have on their

net pay.



Caroline Scott, author of the report, said: ’Employers will need to be

prepared and should start planning their replacement remuneration

programmes now.’



Agencies who use PRP schemes include Shandwick, Countrywide Porter

Novelli, Charles Barker and Complete Pharma. The report says some

businesses could have to top up employees’ pay by eight and a half per

cent.



’The phase-out of PRP is a time bomb waiting to happen,’ said Brian

Friedman, head of the human capital services division at Arthur

Andersen. ’In many cases there is no easy replacement, so it is a

question of how the pain of extra tax is shared between employers and

employees.’



Chancellor Kenneth Clarke announced the phasing out of PRP between 1998

and 2000 in last November’s budget.



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