I am advised by Revenue that the information from tax returns and other sources available to Revenue does not provide a basis to establish the number of pregnant women in 2017 that were in receipt of a company car while on maternity leave, thus incurring a benefit in kind tax charge.
I am advised by Revenue that section 121 Taxes Consolidation Act 1997 provides that an employee is chargeable to tax on the benefit arising where, by reason of his or her employment, a car is made available (without a transfer of ownership) to him or her and the car is, in the tax year, available either for that individual’s private use or to his or her family or household.
The taxable benefit is calculated based on the cash equivalent of the use of the car. This cash equivalent is calculated as a percentage of the original market value of the car. The percentage applied varies according to the distance over which the car is used for business purposes as set out in the table below. The original market value of a car is the price which it might reasonably have been expected to fetch if sold in the State singly in a retail sale in the open market, immediately before the date of its first registration.
|
Business mileage lower limit - Kilometres
|
Business mileage upper limit - Kilometres
|
Percentage applied to Original Market Value
|
|
0
|
24,000
|
30%
|
|
24,000
|
32,000
|
24%
|
|
32,000
|
40,000
|
18%
|
|
40,000
|
48,000
|
12%
|
|
48,000 and over
|
-
|
6%
|
There is no provision for a reduction in business travel due to absence from work such as maternity leave or illness, as the employee retains the private use of the company car. However, if the car is relinquished during the period of absence, a relief known as tapering relief may apply.
Tapering relief operates where a car is available for only part of the tax year. In such cases the cash equivalent for that year is adjusted in the same proportion as that part of the year bears to the full year. Cases where a car is made available to an employee for the first time during the tax year (e.g. on taking up employment) or a car is no longer available to the employee during the tax year (e.g. due to cessation of employment) are examples of when this apportionment can apply. In addition, the business kilometres may be “annualised” for the purpose of determining the percentage charge to be applied in the calculation of the cash equivalent of the benefit of the car. The following formula may be applied to determine the annualised business kilometres:
A x B
C
Where:
A = Actual business kilometres
B = Full Year (in days)
C = Part of Year (in days) for which car is available
Comprehensive guidance regarding the tax treatment of a company car is available in Tax and Duty Manual 05-04-02.
