Inland Revenue Tax Rate

caz4271

Hi looking for help with tax!! I get my mortgage at Bank of England rate of 0.5% which is great, would have been better had I got a Tracker when they were around, but didn't! Anyway I pay income tax on the interest as a benefit in kind as I work for a bank part time and have a staff mortgage. My question is who sets the official rate of interest in the Inland revenue? Can I challenge this? I believe their current rate is set at 4.75%, which seems very high at the moment given that base rate is only 0.5% I feel its unfair given that lots of people are paying a much lower mortgage rate. I have to pay more in tax than I do in interest! :mad: I realise I'm looking for a magic wand, but I could do with cutting costs! Thanks for any help! x

Mikeyorks

It's set by Treasury order. 4.75% throughout 09-10 ..... reduced to 4% from 6.4.10.

As you only pay 20% on the benefit .... it doesn't work out that much? You can only reduce it by getting rid of the beneficial loan and taking one out at rates available to everyone.

http://www.hmrc.gov.uk/manuals/eimanual/EIM26104.htm

HappyMJ

So you'll be paying 0.5% on your mortgage and a further 0.7% in tax as the difference is a taxable benefit. If you can get a mortgage for under 1.2% per year then switch. I don't think you can as the median rate is around 4% as the HMRC states.

caz4271

Thanks didn't know it was dropping to 4%! That helps

Ballymackeonan

Your mortgage is a secured loan - if you don't pay, the provider takes your house back! But if you're paying off a tax bill, you're effectively getting an unsecured loan from HMRC, and you need to compare the rate with bank or building society loan rates. If you do this, it looks a lot more reasonable (though still painful!)

loobylou84

I'm having a similar problem - i suspect with the same bank! I left the bank in 2010 and queried if my mortgage rate would change, however as my partner was still staff the rate was kept on. He has since left and we are still on the staff rate of 0.5%

I just got my notice of coding and have a deduction of almost £4500 due to loan provided (The notice quotes the loan as being from my new employer which is incorrect). To make matters worse, although its a joint mortgage only I pay the difference, i suspect because I'm first named.

We have shopped about for a different rate, but our LTV is 97.5% (staff rate LTV!) and i doubt there is anything available at that rate! We also don't have the money for product fees etc having both moved jobs and recovering from the transition period between salaries!

The irony is combined we now earn 25% more than when we took our mortgage but are stuck due to our LTV!

Any advice - or is it a case of put up and shut up! - Thanks

Mikeyorks

loobylou84 wrote: »

Any advice - or is it a case of put up and shut up! - Thanks

I wouldn't be that rude - but suspect it is?

But do check the £4500 coded out back to the P11D (benefit in kind form) you should have? In other words - if you have to pay it - at least make sure it's right?

jennifernil

If you no longer work for the bank providing the loan, can it still be a benefit?