I propose to take Questions Nos. 60 and 61 together.
The Finance Act, 1982 provides for a specified rate of 12 per cent to be used in assessing the benefit-in-kind from loans given by employers to their employees at preferential rates. This rate applies to both mortgage and non-mortgage loans.
Since 1982, the specified rate has been lower than commercial rates charged for non-mortgage personal finance such as term loans. That is still the position.
Commercial mortgage rates have from time to time been above 12 per cent since 1982; they have also stood at less than 12 per cent, as they do at present. However, in the determination of the benefit-in-kind charge on mortgage loans at preferential rates of interest, income tax relief is allowed (subject to the normal conditions attaching to mortgage interest relief) on interest deemed to have been paid under the specified rate system as well as on interest actually paid. This has the effect of substantially mitigating the benefit-in-kind charge.
The tax treatment of preferential loans, including the level of the specified rate, is being reviewed in the context of the budget.