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Bank Employees with Staff Mortgages
chumboy
Posts: 4 Newbie
This is my 1st ever forum post so please bear with me.
I thought i'd bring it to peoples attention that that HM Customs have sneeked up the 'Official Rate' of interest from 5% to 6.25% for mortgage comparisons. So if anyone has a staff mortgage rate below 6.25% you will have to pay more tax via your P11D statement. So it is probable best to review your mortgage in light of this.
I haven't seen any news in the press about this, though I'm aware of one bank that has highlighted this to staff - and I know of another bank that has not......yet
I thought i'd bring it to peoples attention that that HM Customs have sneeked up the 'Official Rate' of interest from 5% to 6.25% for mortgage comparisons. So if anyone has a staff mortgage rate below 6.25% you will have to pay more tax via your P11D statement. So it is probable best to review your mortgage in light of this.
I haven't seen any news in the press about this, though I'm aware of one bank that has highlighted this to staff - and I know of another bank that has not......yet
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Comments
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Welcome chumboy - very helpful first post!
To calculate the tax liability:
(6.25%-actual mortgage rate%) / 100 x mortgage amount = tax liability. This is charged at 22% for basic tax payers and 40% for higher tax payers.
eg £150,000 mortgage, employees interest rate of 4.5%:
(6.25-4.5)/100 x 150,000 = £2,625. (577.5 for basic and 1050 for higher rate payers) (48.12 and 87.50 per month respectively).I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
they have been taxed like this for some time unfortunatly.0
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they have been taxed like this for some time unfortunatly.
The point is the rate went up in the budget from 5% to 6.25% creating a large tax liability for some.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
did you not know your not allowed to get any kind of frindge bebefits any more :rolleyes:0
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True, there will be more tax to pay than before, but the employee can fund that cost out of the significant and easily measurable financial benefit they are receiving. At the very most, the total tax liability is 40% of the financial gain the employee is making from the cheap loan.
My heart is not exactly bleeding!0 -
well, that very much depends on where you work! My net gain would be -25% if i took out the staff mortgage option at work :rolleyes:0
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So If I get this right, you will pay tax on any difference between the staff mortgage rate and 6.25% Thus virtually totally negating the benefit of a staff mortgage??
I ask, as I might hope to get one in the future...tribuo veneratio ut alius quod they mos veneratio vos0 -
So If I get this right, you will pay tax on any difference between the staff mortgage rate and 6.25%
correct.
So if you can find a mortgage that is a bit higher than the staff mortgage rate you may be better off taking that after you have allowed for the tax payable. All depends what a staff mortgage deal you can get and what other deal you can find. Remember to look at other benefits you may get with a staff mortgage eg fee free, legal work, flexibility, high lending amount....I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Generally speaking staff mortgage rates with specific lenders can normally be beaten on the open market anyway. With lenders still offering mortgages at sub 5% admittedly often with whopping arrangement fees) this just reconfirms that staff mortgages are bordering on pointless. You could be getting a rate significantly higher than that available on the open market, AND get taxed on a supposed benefit.0
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