Vol. 435 No. 6
19 Mr. R. Bruton asked the Minister for Finance the way in which the rate of interest used for calculating liability to benefit-in-kind tax compares with the market rate of interest; and, if he will change the rate used, in view of the unfair impact on those liable to benefit-in-kind tax on preferential loans provided for them.
The current specified interest rates, i.e. the interest rates used to determine the benefit-in-kind charge for preferential loans made to employees by their employers, were set in the Finance Act, 1992, by reference to the prevailing commercial rates. When announcing the new specified rates in my 1992 Budget Statement I stated that the rates would be reviewed before each budget to take account of variations in commercial rates of interest. Because of the substantial administrative burden involved in making variations to the specified rate, and the associated changes in individual tax allowances, it would not be practical to adjust the specified rate in response to every change of market rates during the year.
