Calculate staff mortgages

jtjrlm1

Hi All,

Wonder if someone can help me with the following calculations; I am looking to see if a staff mortgage from a building society I work for will be cheaper than a non staff mortgage.

To calculate the taxable amount on the benefit of the reduced rate, you do the following

HMRC Rate - Staff Rate / 100 x Mortgage Amount = Taxable Amount x basic rate tax (22%) / 12 = monthly tax payment

e.g.

(4.00 - 2.19) / 100 x £150,000 = £2,715 x 22% = £597.30 / 12 = £49.78 per month

But I also understand if I have to take the mortgage out in two parts, one part on staff rate, second part on non staff rate, if there are restrictions on the amount available to borrow on staff rate. I am entitled to reduce my taxable amount by the amount of non staff rate above the HMRC rate.

Does anyone know how do the calculation to reduce my taxable amount??

Thanks in advance.

opinions4u

The basic rate of tax is 20%.

If your mortgage is split across staff and public rate then you need to work out the average.

For example, £100k at 1% and £50k at 3% works out as a 1.67% average. You'd deduct 1.67% from the official HMRC rate.

DVardysShadow

jtjrlm1 wrote: »

But I also understand if I have to take the mortgage out in two parts, one part on staff rate, second part on non staff rate, if there are restrictions on the amount available to borrow on staff rate. I am entitled to reduce my taxable amount by the amount of non staff rate above the HMRC rate.

Does anyone know how do the calculation to reduce my taxable amount??

Easy. Do the calculation you have demonstrated on the amount of money you are borrowing at staff rate.

opinions4u

DVardysShadow wrote: »

Easy. Do the calculation you have demonstrated on the amount of money you are borrowing at staff rate.

Unusually, I disagree.

The average rate is considered to be the base for calculating the taxable benefit.

Unless rules have changed.

monneyspinner

I'd give it a lot of thought...whilst it can be a good benefit it is taxable and despite keeping HMRC fully in the loop, I have just had a bill for £1100 for my tax year ending 2011 as they reconcile a year in arrears and they reckon I'll have a further payment due once they reconcile for last year! I no longer have a staff mortgage and they will advise you it's your responsibility to ensure you are making the correct contributions despite them being the experts! Sadly 100% liability falls with the individual