Tax benefits from mortgage ?

nick1977

brazilianwax wrote: »

Double Income No Kids ies

Ah, thanks for clearing that up!

Nick

nick1977

brazilianwax wrote: »

Believe me, we take advantage of all the breaks we can (will see how long it takes Gordon Brown to tighten up the dividend loophole) but if we never have kids (and it's a real likelyhood) then we won't see any breaks.

On one level I don't mind, but sometimes it bugs me!

Yes we do too. We get an annual bonus with work and this year there is a scheme whereby if we invest it, we get a dividend each year (about 4.9%) and the whole amount after 5 years without tax or NI deduction.
Unfortunately we needed most of our bonus to pay credit cards etc, so yet again this is more beneficial to the richer members of the company who don't need the money now!

Nick

brazilianwax

nick1977 wrote: »

Yes we do too. We get an annual bonus with work and this year there is a scheme whereby if we invest it, we get a dividend each year (about 4.9%) and the whole amount after 5 years without tax or NI deduction.
Unfortunately we needed most of our bonus to pay credit cards etc, so yet again this is more beneficial to the richer members of the company who don't need the money now!

Nick

Ah, not quite the same thing.

At the moment if you are self employed you can take some or all of your salary as dividends. The company pays the tax on it and the individual the NI. So it's tax efficient to do that rather than take a salary.

Sorry to confuse you!

toonfish

when you have kids the child benefit and working family tax credit (assuming you work) is worth much more than the married couples allowance was.

Either way it still won't cover you for an extra £100,000 on the mortgae unfortunately. We maxed up our borrowing on an interest only basis until all the kids were at school and are now taking steps to repay the loan. It's risky but we felt it was worth it for them to grow up in the right environment.

brazilianwax

toonfish wrote: »

when you have kids the child benefit and working family tax credit (assuming you work) is worth much more than the married couples allowance was.

Either way it still won't cover you for an extra £100,000 on the mortgae unfortunately. We maxed up our borrowing on an interest only basis until all the kids were at school and are now taking steps to repay the loan. It's risky but we felt it was worth it for them to grow up in the right environment.

But if you're married and don't have kids, or you earn too much you get nothing

toonfish

brazilianwax wrote: »

But if you're married and don't have kids, or you earn too much you get nothing

well, if you earn too much you don't need it, and if folk got paid just for getting married there would probably be even more divorces that there are now surely?

Madjock

Ok, I'm probably going to get some stick for saying this, but people choose to have kids, it's a lifestyle choice.
I choose not to and I get no tax breaks or benefits, but some of the tax I pay gives tax relief and benefits to those who do. And still people with kids are never ever happy.
Here's a tip, don't have kids.

dunstonh

The UK needs an increased birth rate for economic reasons. Thats the reason there are tax benefits.

MarkyMarkD

I don't believe you are correct, dunstonh. Britain's tax benefits for children (or their parents) are miserly compared to most countries. And because most are means tested, they are more of an incentive to low-income earners to have children - and they are scarcely the sector of society that need encouraging to reproduce.

If the government were serious about an increased birth rate, they would incentivise all parents, in a meaningful way, which they don't.

I'm also not sure that an increased birth rate IS required for economic reasons, when you consider the amount of immigration (particularly from other EU countries) which is meeting any shortfall in the workforce and, in theory at least, leading to increased tax revenues.

JoeK_3

nick1977 wrote: »

It seems there is nothing that can help us poor people just making our first step onto the property ladder.
My wife and I earn about £40k between us per year, and have an £800 pcm mortgage on a 1 bed maisonette. We are wanting to start a family but dare not until we can afford the next step up the ladder. A typical 3 bed semi in this area goes for about £280k and our place is now worth est £165k with £125k remaining to pay.
I personally think it stinks that the only way we can get any kind of tax relief to help us make the next step is to have kids now, and then show we can't afford a home with more than 1 bedroom and get council housing.
Tax relief on mortgage, married couples allowance - all gone.

Sorry for sounding off, but I have recently become more and more pi**ed off at the fact that the Government doesn't seem to want to help anyone who wants to do things the "traditional" way. i.e. Get married, get a family home, and have kids!

Nick

Have you considered a shared ownership property???

If you are unable to buy a property outright on the open market, then shared ownership is the ideal solution for you. Shared Ownership is a part buy, part rent scheme, which enables purchasers to buy a home in stages. Purchasers can buy an initial share between 25% and 75% of the value of the property and pay a subsidised rent on the remaining value of the property. Shared ownership properties can be provided by housing associations, housing trusts and local authorities. These organisations try be as flexible as possible with regards to the initial share purchased, but this may be as much as 50% of the market value at some of their developments.

A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where possible. You will need to have sufficient savings to cover the initial cost of home ownership: legal fees and stamp duty for example. You will need to be able to meet the costs of rent, mortgage, service charges and other associated outgoings.

As your income increases, you can buy further shares of your home until you could own 100% of the value and no longer share the ownership with the housing association or trust. The greater the percentage you own, the lower the percentage on which you pay rent. However, if you do not wish to buy more shares in the property, you do not have to. Obviously, the more you own, the less you pay in rent. And, if you can buy your home outright in the future, then no rent will be payable.

JoeK