Benefit in kind effect mortgage query?

craigy1111

Hi all,

My employer is offering a mortgage product of 2.24% (1.74% above base) to employees. I have recently came out of my probation period and i'm thinking about applying for a 95% mortgage with them.

I have been advised there is benefit in kind implications, i've tried asking about and searching but I can't find any information about what this actually means to my NMI.

My GAI is £13608 and NMI £958. The mortgage payments are £158 based on a 40 year term on £50,000.

I'm just looking to know what it actually means to my monthly income afterwards since the benefit is taxed? I just can't get my head around what will happen

kingstreet

HMRC sets its rate based on the market. IIRC it's 4%.

http://www.hmrc.gov.uk/rates/interest-beneficial.htm

If your mortgage rate is 2.24%, the BIK is the difference, 1.76% pa and you will be taxed on that.

craigy1111

kingstreet wrote: »

HMRC sets its rate based on the market. IIRC it's 4%.

If your mortgage rate is 2.24%, the BIK is the difference, 1.76% pa and you will be taxed on that.

I see, works out at around £10 a month extra tax according to my calculations, thank you

kingstreet

£50,000 x 1.76% = £880 per annum.

£880 x 20% = £176 per annum additional income tax, or £14.66 per month.