Having HMRC pay your Mortgage Capital?

TL13448

I had a call from a "Tax Advisor" asking if I had a mortgage and about a little known way to have HMRC actually repay the capital part of my mortgage (just the capital not the interest)
Obviously he has something to sell and he is self employeed so very very cautions about this but all the same it sounds too good to be true

I have googled and searched the internet and can find nothing on this subject.

Have any of you heard of this? or even been successful in claiming?

Thanks
T

PlutoinCapricorn

This seems much too good to be true. They fact that they approached you is very suspicious: there would probably be a lot of fees to pay up front, with no results.

jamesd

There's no secret to this. Just pay into a pension and take out the tax relief as the tax free lump sum. Voila, HMRC repaying the capital part of the mortgage.

It's one of the most efficient ways there is to clear a mortgage, even more so for anyone paying 40% or higher income tax or in a salary sacrifice scheme at basic rate. You get a combination of cheap mortgage repaying and pension pot to provide retirement income.

John_Pierpoint

Remember that your pension "pot" can be outside of your estate (until age 75?).
So beware of having too valuable a home:
Take the tax free lump sum -> convert to bricks and mortar -> pop clogs -> pay 40% IHT on estate value > £ 325k .

If they cannot get you one way round they will get you the other way round.

Vermin

Hi all, I had a cold call from a wealth advisor too, he was trying to convince me to go in to go in to see him. He mentioned something about getting HMRC to pay off my mortgage and I assume he was referring to this. I don't completely understand how it works... Perhaps I should go in to see him but I had a natural aversion to going to see a guy who'd cold called me... Anyway, is there a benefit to taking the tax relief out of the pension pot and paying off the mortgage rather than leaving it in the pension pot? If so, how do I go about taking the tax relief out of the pension? Is there any more info on this anywhere? Thanks...

dunstonh

be wary. Decent and honest financial services companies do not cold call. Most of the cold calls come from scams or unregulated firms.

Anyway, is there a benefit to taking the tax relief out of the pension pot and paying off the mortgage rather than leaving it in the pension pot?

you cant do that. Tax relief is provided on contributions made to the pension. You cant take that money back. it is part of the pension value until you hit the retirement age range (55-75). At which point your option is to leave the pension in place until you retire (nearly always the most sensible option) or commence the pension with the pros and cons that go with that.

I suggest you take a look at the pension section as we frequently get people talking about cold calling in there and nearly always they are scams.

CKhalvashi

jamesd wrote: »

There's no secret to this. Just pay into a pension and take out the tax relief as the tax free lump sum. Voila, HMRC repaying the capital part of the mortgage.

It's one of the most efficient ways there is to clear a mortgage, even more so for anyone paying 40% or higher income tax or in a salary sacrifice scheme at basic rate. You get a combination of cheap mortgage repaying and pension pot to provide retirement income.

This is what we're doing with our BTL's, on condition we can remortgage to IO's again.

On a business property, you can claim 4% yearly over 25 years, but on a personal property there's no way you'll be able to do this.

CK

YoungBusinessman

I need to find out more about this! Even putting in a whole years salary for a few years before taking the lump sum?

CKhalvashi

YoungBusinessman wrote: »

I need to find out more about this! Even putting in a whole years salary for a few years before taking the lump sum?

Ex:

£500k pension pot
£125k mortgage

25% of £500k pension pot = £125k

Pay off mortgage, difference in pension income means same-ish lifestyle as before.

This is, however, leaving many factors out the equation.

CK

YoungBusinessman

What you posted is about as much as i know...i would imagine it could be easy to do if already mortgage free and buy a buy to let near retirement? Bearing in mind im 21 and hope/plan on being wealthy to the point i dont need to work in next 25 years...

zygurat789

So what would the contributions be to achieve a £500k pension pot over 25 years compared to a £125k mortgage?