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

flanajb

getmore4less wrote: »

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

Ok. My figure was slightly out. Even still, I am challenging HMRC and will go to court and even take a custodial over this.

They are robbing me. I am proposing that as my mortgage was a 2 year tracker and the terms of my mortgage were fixed on the day the product started, then the spread to the HMRC rate should have also been fixed at 1.36%. This calculated spread should have then been used for the duration of my product.

My argument is that I did not have a crystal ball to work out my tax liability for the 2 years and the rate they have applied is way off what the actual benefit in kind was.

getmore4less

What was your tax rate?

because you took the 0.35% rate reduction for a 1.36% BIK

At 20% you were net +0.078% gain (£156py)
At 40% you were net -0.194% loss. (-£388py)

flanajb

getmore4less wrote: »

What was your tax rate?

because you took the 0.35% rate reduction for a 1.36% BIK

At 20% you were net +0.078% gain (£156py)
At 40% you were net -0.194% loss. (-£388py)

I am a 40% tax payer, and to be honest when I took the mortgage out I did not even know there was an 'Official Interest Rate' that would be used to tax me.

I know that sounds stupid, but all my employer stated was 'You maybe subject to additional taxation from the Inland Revenue'. The main reason for taking it out was due to the ease with which the mortgage was setup due to me being an employee.

I appreciate it is my fault for not looking into it.

getmore4less

I am a 40% tax payer,

Woops so you were losing money from day one, that won't look good on any claim against HMRC, it was clear from the start there was no benifit(on rates) of taking the staff loan.

Unless being an employee AND taking a staff mortgage giave you access to better LTV and income multiple than the regular mortgage there was no point in taking the staff mortgage.


(not sure on the NI situation but if that was also payable then a 20% tax payer could also have been losing money from the start.)

opinions4u

flanajb wrote: »

Ok. My figure was slightly out. Even still, I am challenging HMRC and will go to court and even take a custodial over this.

Look, you may feel hard done to. You may feel it's unfair. But I really can't stress enough that you are urinating in a gale force wind with this approach.

This is a money saving forum. My money saving advice is to accept the tax position is as it is, learn from it, and move on.

You will not win by challenging HMRC directly and you will not win by taking them to court. You will lose a lot of money doing so. Talk to your trade union if you're a member and ask them to take the case up. They will almost certainly explain why they aren't prepare to risk members' money pursuing it.

samba

flanajb wrote: »

I appreciate it is my fault for not looking into it.

I think that just about sums it up. Best thing you can do is put it down as a lesson learned and move on.