Benefit in Kind Tax - can this be offset against rental income?

Jflet5

Hi,

I have a question regarding my tax liability for the coming year.

I work for a bank and have taken advantage of a staff mortgage deal which I have on a property I now rent out. As the interest rate is not publically available I am obliged to pay benefit in kind tax on this (based on the benefit I receive through paying a lower rate of interest to the one set by the Inland Revenue)

As the Inland Revenue rate for beneficial loans is quite high at the minute the tax liability could be significant. However, as you can off-set interest payments on mortgages from rental income would I be able to off-set the benefit in kind tax I need to pay? (as essentially this is an interest cost the Inland Revenue are assuming I would have paid had I been on a ‘normal’ rate of interest).

Hope that makes sense.

taxing

Yes, it does and yes you can.

Regards.

Jflet5

Thanks,

Can you supply a little more info please?

I have receive conflicting information from accountants and HMRC so would like to get this cleared up.

taxing

This extract from the HMRC tax manuals acknowledges a claim can be made.

http://www.hmrc.gov.uk/manuals/eimanual/eim26135.htm

Note it is the cash equivalent benefit assessed to tax that is the allowable interest deduction - and not just the tax you pay on that assessed amount. You can also claim for the interest you do pay on the loan.

Regards

Jflet5

Thanks very much for this.

That's really useful.