I propose to take Questions Nos. 200 and 204 to 208, inclusive, together.
For income tax purposes a benefit-in-kind may be described as a benefit in a form which cannot be converted into money but which nevertheless confers a benefit on an employee or director. The normal method for collecting tax on benefit-in-kind is by means of reducing the taxpayer's tax free allowance by the appropriate amount.
Special rules – introduced by the Finance Act, 1982 – apply to the benefit-in-kind on a car made available by an employer for an employee's private use. These rules impose a charge based on 30 per cent of the original market value of the car where the employer also pays for all the normal running costs. Where an employee pays the running costs, such as road tax, insurance, servicing, repairs and private petrol costs. the 30 per cent charge can be reduced by various amounts to a minimum of 18.5 per cent.
In addition, a system of tapering relief applies where an employee's annual business mileage is over 15,000 miles. Under this tapering relief the benefit-in-kind charge is reduced on a sliding scale, with a maximum reduction of 75 per cent where the annual business mileage exceeds 30,000 miles. This tapering relief is of particular benefit, for example, to company representatives with high business mileage.
The Finance Act, 1996, introduced a further concession for company representatives, particularly in urban areas such as Dublin, who use their company cars intensively but who do not accumulate significant business mileage. Where such employees meet certain conditions they are entitled to a 20 per cent reduction on the benefit-in-kind charge as an alternative to the tapering relief described above.
Benefit-in-kind charges are one of the issues which will be considered in the run-up to the next budget.