Moves to stop hospitality staff having to hand over payroll tax on their tips have been passed by MPs.

Wayne Furbert, the Cabinet Office Minister, said the change was needed to cover tips generated by a service charge on customer bills.

The minister told the House of Assembly yesterday: “This Bill includes both substantive and consequential amendments which are aimed at clarifying and updating our tax code.

“This Bill will guarantee that certain gratuities received by employees are not subject to payroll tax.

“This change is intended to eliminate uncertainty in the hospitality industry in relation to customer gratuities — or tips as most of us call it.

“Customer tips provide a much needed boost to the salary and wages of many employees working in the hospitality industry.

“The customer gratuities can help to offset any reduction in income during the times when there is a slowdown in business.

“Some employers in the hospitality sector have treated automatic gratuities subject to payroll tax, while others have, correctly, excluded them.

“The different treatment is very likely due to a lack of clarity in the law.”

Cole Simons, the One Bermuda Alliance leader, said the changes should also cover other workers in places such as gas stations.

He said: “I wouldn’t restrict this to the tourism industry because there are a number of professions that deal with gratuities. And I’m thinking of attendants at service stations.”

MPs approved the Payroll Tax Amendment and Validation (No 2) Act 2022.