Bank staff who got mortgage write-offs now facing tax bill
Published 10/01/2014 | 02:30
BANK staff who got preferential mortgage interest rates, and subsequently had part of the debt written off, could find themselves facing a tax bill from the Revenue Commissioners.
Revenue has confirmed that it will scrutinise any deals secured by bank staff with the special mortgage rates where part of the debt is eliminated.
Many bank staff have benefitted from mortgages secured from their employers at better rates than were offered to the general public -- but it is not known how many staff in each bank are on the special rates.
These mortgages are taxed on a benefit-in-kind basis.
But if staff get into trouble with their repayments and secure a reduction, or write-down, the Revenue will be closely examining the deal.
"The legislative position is clear," said a Revenue spokeswoman. "Where an employee receives a benefit from their employer, it is subject to income tax. This includes preferential interest rates and loan write downs."
But she said there may not be a tax liability in all cases.
"If it can be shown that the outcome of a write-down would be the same for an employee of a bank as it would be for the customers of a bank, Revenue will look at the write-downs on a case-by-case basis."
Bank of Ireland and Ulster Bank both said that they do not offer write-downs to staff.
Bailed-out AIB refused to answer the question when contacted by the Irish Independent.
Bank of Ireland said that the interest rates on the open market are currently better than those it offered to staff under preferential rates.
It also declined to say how many staff have preferential rates, but it's understood that there are around 1,000 preferential mortgages issued by the bank to staff in the Republic of Ireland and hundreds of additional loans with preferential interest rates.
Ulster Bank would not say how many of its staff are on preferential mortgages.