Mortgage P11D

Gammon107

I worked for a bank from 2007-2009. In 2008 they offered me a mortgage which had a preferable interest rate to anything else on the market at the time. I was made redundant in 2009 but have had the same mortgage since the year before. This morning I received an alarming letter from HMRC claiming £2200 in unpaid tax due to underpayment on a beneficial loan. This was shocking and surprising as the bank I worked for did not tell me that this mortgage would be liable for tax as a benefit. I have not paid tax on it since I took it out in 2008 so am now wondering how I am liable for tax all of a sudden. I called HMRC who told me that my ex-employer had neglected to send a P11D since 2008 but had now sent one which made me liable for back-tax for FY 2013. So my points a thus:
1) Had my employer informed me of a tax liability on this mortgage, I may well not have taken it. Their not informing me meant I made a financial decision based on incomplete information.
2) Given that I have not paid tax on it for 5 years, surely it is unfair to now make me liable for tax and expect me to cough up over £2k. If I had been given the information that the situation was changing after 5 years, I would have changed mortgage to avoid this tax. I now do not have that option.
3) They have submitted this P11D late, meaning I have to be back-taxed and robbing me of the chance of making an informed decision on my mortgage.

What are my rights here? I feel my former employer is liable for this cost, not me. This tax claim is based on a decision I made 5 years ago without the full financial implications being explained to me. Also, their actions in not submitting a P11D for 5 years meant I continued to be oblivious to the taxable nature of this mortgage. If I had known, I would have switched to avoid it.

If I was in possession of the full facts around this product, I would not be in this situation with this claim hanging over me.

I could suggest this has been caused by two things; a simple mistake or mis-selling. Either way, this situation has come about through no fault of my own.

Would appreciate some comments.

andrea_louise

Do you still possess the initial paperwork? If so, and there is nothing to say that it's a taxable benefit, then yes take it up with the financial institution that sold you it! There are excellent mis-selling guides for ppi on here, not sure about mortgages.

What is the annual taxable benefit of the mortgage? Are there more competitive rates currently available?

Gammon107

Thanks for the replies. I have the original paperwork and nothing is mentioned about it being a taxable benefit. The first I have heard of any suggestion of tax being payable was yesterday, some 5 years after taking out the mortgage. I have written a letter of complaint which I will send to the bank, my former employer, tomorrow. The only people I've spoken to so far are HMRC.

NYM

It's my understanding that ANY loan from your employer to you is treated as a beneficial loan (even if the same product is offered to the general public, as it would be in the case of a Bank Mortgage )
The difference in the rate you pay and the 'official' one available to the public, is the taxable part. (taxed at your normal rate 20%/40% or whatever)

A P11D should have been completed by them for each year you were employed. Your tax code for the year should have reduced, reflecting the taxable benefit.

I have to say I'm surprised that a Bank have left it so long before advising the Revenue. It's something they deal with in the normal course of business; lending to employees :think:

Good luck with sorting this out.