Am I liable for benefit-in-kind tax on firm's flat?
I am being transferred to our Dublin office for six months. The company keeps an apartment for employees there for this purpose and I will be living in it. A colleague told me I will be liable for benefit in kind, but it's not my choice, and I'll still be paying my own mortgage while I'm there.
An employee using employer-provided accommodation is liable for benefit-in-kind tax, which is treated as extra wages for the employee.
The calculation is based on the annual rent, or proportion thereof, the employer might reasonably expect to receive for the property.
According to Louise Carey of taxconsultant.ie, the yardstick for calculating the rent foregone is 8pc of the current market value of the property less the cost of repairs, insurance etc, borne by the employer for the property, although if a lower figure can be certified to Revenue, then that will be used.
Louise has provided an example for you:
Apartment purchase price: €300,000; Current market value: €200,000.
€200,000 x 8pc = €16,000 p.a.
Notional pay of €16,000 (€307.69 pw / €1,333.33 pm for the time you have the use of the property) must be added to your salary or wages for the purposes of calculating PAYE and PRSI.
You can still claim mortgage interest relief (if you qualify) on your own home, but if you choose to rent it out over the period, you will have resultant income tax issues from rent received.
My sister, rightly or wrongly, bought a shared ownership in her local authority house a few years ago. She couldn't really afford it then and certainly can't now -- she is in arrears. The council is threatening repossession and she is very frightened. Isn't there a moratorium against this?
The moratorium on issuing court proceedings for repossessions is part of MARP (Mortgage Arrears Resolution Process), in itself part of the Code of Conduct on Mortgage Arrears (CCMA) by which all banks and building societies are bound.
However, according to Noeline Blackwell of the Free Legal Advice Centre (FLAC), local authorities are not bound by it as it only applies to lenders who report to the Central Bank.
"There is no similar structure for local authority loans as they report to the Depart- ment of the Environment.
"It did circulate 'guidance' to local authorities in 2010 based on the CCMA but this has not been followed by a comprehensive loan management manual which would provide a separate system for local authority borrowers. The Department now says that this is 'imminent'."
In the meantime, each local authority has its own way of dealing with mortgages. It remains important that your sister advises her local authority lender she is in difficulty. They should give her an outline, in writing, of how they propose to deal with her. You could also ask if the MARP process is being followed.
However, in the absence of clear guidelines, your sister may not have a good outcome.