Those hit by employee mortage 'Benefit in Kind' stand up and be counted!

flanajb

I took out a 2 year tracker rate mortgage in April 2008 with my employer RBS. The product tracked the BoE base rate less -0.11%. At the same time RBS were offering a 2 Yr Tracker +0.24% to the general public.

I have been abosultely hammered by HMRC as a result of the official interest rate being 4.75% for the duration of my mortage when the BoE rate was 0.5%.

Given my mortgage was 200k my tax liability is not short 18k.

I have argued that my actual BIK should be related to what was on offer in the high st, or failing that, it too should track the BoE rate for the duration of the loan.

No one in HMRC wants to listen to me and I have now had enough. I have just received another 4k tax demand today for 09/10 tax year.

There must be loads of people in a similar position and I want to make s stand and fight this. But to do so I need others to come forward!

I have no issue paying tax, but I do take issue at being robbed.

Wh05apk

Unfortunately it is one of those "perks" not worth having, I had a staff mortgage years ago, but moved it away as soon as I could, as it just was not worth it.

Thrugelmir

flanajb wrote: »

I have argued that my actual BIK should be related to what was on offer in the high st,

Average SVR on the High Street is higher than 4.5%.

If you have known this for 2 years. Then surely it would have been tax efficent to reduce the size of your mortgage?

flanajb

My issue is that I did not have crystal ball when I took out my mortgage, and to be honest, was totally unaware that there was an official interest rate that could move in any direction.

I naively thought that any Benfit in Kind tax would be fair.

If someone had explicity made it clear and said 'Hey, did you know that there is a magic rate that the tax man will use to work out your BIK for the duration of your product and although the BoE rate and your mortgage rate might go down, theirs may not' then I would have run a mile as I have a fear of the unknown

flanajb

Thrugelmir wrote: »

Average SVR on the High Street is higher than 4.5%.

If you have known this for 2 years. Then surely it would have been tax efficent to reduce the size of your mortgage?

Your are missing the point. Mortgages now are higher than 4.5%, but like any mortgage they give you a discount rate, but with a high redemption clause. Mine was 2%, so to have left the product would have cost 4k.

Do you not see that the actual BIK is what my employer was offering to the general public at the time I took the product out. eg Boe + 0.24% and an arrangement fee of £750 ?

Wh05apk

I think this is an issue for your employer, if they offer you a "perk" they should make you aware of any BIK liable, normally this would be a small amount, and so would not be an issue, it is only now an issue as rates have tumbled, but the official rate has not changed. Where there is such a major impact, I would have thought the onus should be on RBS to make their staff aware of the potentially large liability, as clearly you would have been much better off elsewhere.

VT82

You can't compare your term tracker rate against a two year tracker rate, as no one offers those kind of tracker rates any more, so the comparison isn't valid for the whole time you've had your mortgage. You could try and argue it should be compared the the term tracker rate they were offering at the time maybe. You won't win with HMRC though.

At least your underlying mortgage is only 0.39%.

I have a staff mortgage as well, but it is fixed. I also had to borrow some alongside on a BBR tracker. I stupidly increased the amount I had on the staff rate (and made the staff rate part interest only) just before rates plummeted. So now it is not only costing me more in interest than the non-staff part, but I pay extra tax as well, and if I want to leave my employer, I will have more on their SVR rather than on the BBR tracker as a result! Not a very smart move.

But I thought the 'official' rate had been reduced, as my tax code improved last year. I was always under the impression it was linked to the Halifax SVR, but could easily be mistaken.

flanajb

VT82 wrote: »

You can't compare your term tracker rate against a two year tracker rate, as no one offers those kind of tracker rates any more, so the comparison isn't valid for the whole time you've had your mortgage.

I don't quite understand your point ?

Any 2 yr tracker taken out in Apr 2008 would have tracked the BoE for the period. So why is it no valid to compare the RBS staff 2 year tracker with the RBS high St Tracker at the same point in Apr 2008. I have a detailed print out of what I could have taken out if I had walked into my local RBS branch in Apr 2008. Of course the comparison is valid. These are like for like products, both were 2 year BoE base rate tracker mortgages

VT82

flanajb wrote: »

I don't quite understand your point ?

Any 2 yr tracker taken out in Apr 2008 would have tracked the BoE for the period. So why is it no valid to compare the RBS staff 2 year tracker with the RBS high St Tracker at the same point in Apr 2008. I have a detailed print out of what I could have taken out if I had walked into my local RBS branch in Apr 2008. Of course the comparison is valid. These are like for like products, both were 2 year BoE base rate tracker mortgages

Oops, I thought your mortgage was BBR-0.11% for term (like mine is fixed for term). What has it reverted to?

flanajb

VT82 wrote: »

Oops, I thought your mortgage was BBR-0.11% for term (like mine is fixed for term). What has it reverted to?

I saw out the 2 years, because of the redemption penalty and then switched to a non RBS product, so that tax man cannot clobber me.

I think I may seek legal advice for being missold the product in the first place without being made fully aware of the floating rate tax implications

newyear2011

I too feel likes this, when I did the tax calculation it worked out £32 a month extra in tax so was very worthwhile. Looking through my payslips for the last year however my tax code seems to vary month to month and not just by a couple of numbers. any idea's?