Benefits In Kind & Tax??

ptee

Hi, not sure if this is the right place for this?
We've just been informed that the official interest rate for calculating the taxable benefit on concessionary loans is increasing from 5% to 6.25%

I've got a staff mortgage of £145000 over 25yrs. The interest rate is BoE so 5.25%. I'm a higher rate tax payer. According to what we've been told if I had a £100k mortgage it would mean I'd be taxed approx £400 so at £145k mortgage that would be approx £580 a year.

I've been looking at an offset mortgage to start in the new year at a rate of 5.7%. Now the difference in monthly payments between 5.25% and 5.7% id £38.92, * 12 months = £467.04 that I'd be saving.

Surely if my numbers are correct this increase in tax wipes out the benefit of the staff rate. Have I missed something here??
Should i just swap to the offset now in preperation for my savings arriving?

Andy advice would be great!
Thanks

Ptee

Andy_L

Is that offset mortgage still at a preferential staff rate? If so you'd still pay tax on it.

ptee

Andy_L wrote: »

Is that offset mortgage still at a preferential staff rate? If so you'd still pay tax on it.

No it's just a public product. I didn't take much notice when we took the mortgage but now i'm thinking I'd be better elsewhere, it's a bit confusing.
Time to ring my friendly mortgage advisor!

Thanks
Ptee

jennifernil

That sounds really unfair! Our mortgage is at Bof E minus 0.13%, and anyone could have had that.

sarahlouise210

wait until you get your P11D (statement of assessable benefits) - you will then know the true amount of the benefit (whatever benefit is shown x by 40% is what you actually pay in tax)
If it works out cheaper to switch then condsider it ...but your calcs may be wrong. You should have your P11d by middle may at the latest

Bean_Counter

P11Ds are not due until 6 July, although many will do them earlier.

ptee

I'll hang fire for now I think and see what the P11D says :beer: