Taxable Benefits

HC Deb 28 July 1988 vol 138 cc491-2W

Mr. Austin Mitchell

To ask the Chancellor of the Exchequer (1) whether he will bring up to date his reply of 6 April 1987Official Report, column 78, concerning taxable benefits together with an estimate of (a) the amount by which the scale charges for company cars fall short of the true value of the benefit and (b) the estimated yield from taxing the full value;

(2) what is his estimate of the real and the taxable value of benefits subject to (a) special and (b) general rules, together with the estimated revenue therefrom.

Mr. Norman Lamont

The available information, based on projections from data relating to 1985–86, on the taxable value of benefits and the tax yield arising are as follows:

Benefit provided by the employer—1988–89	Taxable value	Tax yield £ million
Cars and free fuel for private use	2,400	700
Private medical insurance	260	80
Other expense payments and benefits	360	120
TOTAL	3,020	900

My right hon. Friend the Chancellor of the Exchequer indicated in his Budget statement that independent studies had suggested that the 1987–88 scale charges represented only about one quarter of the value of the benefit of a company car. But it is not possible to estimate any additional tax yield from changes without detailed assumptions about the level of each of the scales and the extent to which the rules which currently relate to them would continue to apply.

The taxable value of free fuel for private use provided by an employer is calculated by reference to a set of scale charges. For private medical insurance premiums and most other expense payments and benefits—the main exceptions being beneficial loans and accommodation provided by an employer—the taxable value is the cost to the employer of providing the benefit. The taxable value of beneficial loans is calculated by reference to the difference between the official rate of interest (which broadly reflects commercial rates) and the actual rate of interest paid; accommodation provided by an employer is taxed by reference to the annual value of the accommodation, less any rent paid. The Inland Revenue does not collect information on any other basis of valuation.