We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
We're aware that some users are currently experiencing slow loading times and errors on the Forum. Our tech team is working to resolve the issue. Thanks for your patience.

BIK Loan

M635
M635 Posts: 63 Forumite
in Cutting tax
Hi,

Sorry if this is the wrong board.

I'm looking at taking a loan from my employer for £7000 at a preferential interest rate, my question is do I pay BIK on the whole 7k or just the 2k which is above the 5k tax free value.

I've looked online and cannot find the answer or a calculator to work this out.

Thanks

Comments

  • nomunnofun
    nomunnofun Posts: 841 Forumite
    It is on the whole loan but is averaged out. Here is the official calculation form.

    http://www.hmrc.gov.uk/ebu/p11dws4.pdf
  • SuperHan
    SuperHan Posts: 2,269 Forumite
    Part of the Furniture 1,000 Posts
    What is the preferential interest rate?

    You basically calculate what the interest would be if you had taken at a market rate (currently 4%), and deduct the interest you are actually paying to get the benefit in kind amount.
  • taxguru
    taxguru Posts: 5 Forumite
    Budget 2013 has raised the threshold for employee loan from £5000 to £10,000 from 06 April 2014. So a preferential interest rate on a £7k loan will not lead to a BIK charge from that date.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 354.4K Banking & Borrowing
  • 254.4K Reduce Debt & Boost Income
  • 455.4K Spending & Discounts
  • 247.3K Work, Benefits & Business
  • 604.1K Mortgages, Homes & Bills
  • 178.5K Life & Family
  • 261.6K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 37.7K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.
Update Your Picture