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

dunstonh

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

Did you seek financial advice when purchasing the product or did you buy without advice?

getmore4less

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

Was the mortgage taken with any regulated advice, or were you just given the option of a staff mortgage or an ordinary one.

They would probably also need to be able to give tax advice as well most mortgage advisors probably can't do that.

The generral principle with tax is it is your resonsibilty to get it right.

getmore4less

Looking at your mortgage

£200k base -0.11% alternative base + 0.24%

April 2008 the base rate was 5% till Oct 2008

official rate was 6.25%

Edit 1 : posted too soon

So if I have this right, not 100% sure how this BIK is calculatted but can check

you took a 0.35% discount for a BIK of 1.25%

Even taxed at 20% or 40% you were making a loss when you took out the loan from the begining.

edit 3 : looks like you were 0.1% better off at 20% tax. ( so £200 )


Is this right?

edit 2 : add the links to the data
BIK
http://www.hmrc.gov.uk/rates/interest-beneficial.htm
base
http://www.bankofengland.co.uk/mfsd/iadb/Repo.asp

dunstonh

opinions4u wrote: »

HBOS always sold staff loans on a non-advised basis.

Their argument was that it was down to the individual staff member to better understand their personal tax situation.

I personally think that's a reasonable approach.

That matches what it was like at Lloyds when I was there. Staff mortgages were non-advised. They gave some generic info but if you wanted advice then you needed to seek it accordingly.

maninthestreet

flanajb,

If you did not have a staff mortgage, and took out a mortgage with some other lender, would you actually be better off?
FYI, it's no point complaining to the HMRC about the BIK tax, unless you believe their calculation of the tax owed is incorrect.

getmore4less

had a look at the work sheet
http://www.hmrc.gov.uk/ebu/p11d-ws4-2010.pdf

So for the latter part of your loan.

£200k @ 4.75 =£ 9500
interest paid
£200k @ 0.39% = £780


BIK £8720 tax at 20% is £1744.

where do you get £18k from?

Depending on salary I think some NI may also be due.

Are you a base rate taxpayer or 40%?

silvercar

I think your only comeback would be if you sought advice and the advisor told you that your best option was to take a staff mortgage; but then he probably would have told you that he couldn't help you with it and to do it yourself:(

maninthestreet

getmore4less wrote: »

had a look at the work sheet
http://www.hmrc.gov.uk/ebu/p11d-ws4-2010.pdf

So for the latter part of your loan.

£200k @ 4.75 =£ 9500
interest paid
£200k @ 0.39% = £780


BIK £8720 tax at 20% is £1744.

where do you get £18k from?

Depending on salary I think some NI may also be due.

Are you a base rate taxpayer or 40%?

I think the OP was referring to their benefit in kind over 2 tax years:

£8720 X 2 = £17440, which is not far off £18K.

Meeper

Indeed, but that's the taxable amount, not the tax payable.

getmore4less

maninthestreet wrote: »

I think the OP was referring to their benefit in kind over 2 tax years:

£8720 X 2 = £17440, which is not far off £18K.

Should be no where near that

quick calculation on the efective BIK rate April 08-March 10 on the full £200k

1.36% 6m
1.86% 1m
3.36% 1m
4.36% 1m
4.86% 1m
5.36% 1m
4.46% 13m

which works out at around £14323