A benefit in kind is a 'payment' made in a different form to salary or wages. It is a consideration which may be offered in lieu of cash, for example free meals, gym membership or a company car.
Under the new structure, Benefit in Kind car charges will be primarily based on carbon dioxide (CO2) emissions and the list price of the vehicle.
The updated system follows the UK's approach. However, in the Isle of Man, the maximum tax rate for the cash equivalent is 22%, a contrast to the potential rates of 40% or 45% in the UK.
For example, the owner of a 4x4 petrol Range Rover will pay an additional £2,766.40 in tax from car liabilities, while the owner of an electric Volkswagen – ID.3 would pay an additional £157.08.
A Benefit in Kind fuel charge only occurs where fuel is provided to the employee for private use. Individuals do retain the option to pay for their own fuel for private use and negate the charge as a result. Electricity provided as fuel will not be subject to a Benefit in Kind charge.
The amendments, effective from 6 April 2024, mark the first change to the calculation since 2009.
Minister for the Treasury, Dr. Alex Allinson MHK, said:
‘This shift towards greener motoring is strategically aligned with the goals set out in the Climate Change Plan 2022 to 2027.
‘We have employed an inclusive approach which considers various scenarios, including older models (such as a Vauxhall Meriva) and the top three company cars in the UK (Nissan Qashqai, Vauxhall Corsa, and Kia Sportage).
‘Individuals, especially those in company car schemes, are advised to familiarise themselves with the revised framework so they can better understand the changes to their tax liabilities.’
