Forces Help to Buy & tax implications

Mrs_Shoes

I have been working out a budget in order for us to buy our own home using the new forces help to buy scheme.

The document communicated from the MOD contains a calculator which enables you to work out any tax changes that loaning the money will have. I cannot make head nor tail of it. I've contacted the AFF and the NEM teams and they don't know how it works. We were looking to borrow between 15-20k.

Does anyone have a simple way of working out what the tax implications of getting the loan would be? Thanks in advance. (And I hope this post makes sense!)

Mrs_Shoes

If anyone else comes across this thread who needs the above information, a quick call to HMRC & they will work out the extra tax implications for you :T

BWZN93

Out of interest was it a significant tax impact? I was going to apply for LSAP but that's being suspended while they try this out, not sure whether it's going to benefit me or not!

Mrs_Shoes

jw1096 wrote: »

Out of interest was it a significant tax impact? I was going to apply for LSAP but that's being suspended while they try this out, not sure whether it's going to benefit me or not!

On 15k they said it would be just under £20 per month, with my husband being a higher rate tax payer. I was expecting it to be more!

stephenni1971

In laymans terms you are not paying tax on the amount of the advance - the tax is calculated on the interest you would have paid had it been a normal loan.

Mrs_Shoes

stephenni1971 wrote: »

In laymans terms you are not paying tax on the amount of the advance - the tax is calculated on the interest you would have paid had it been a normal loan.

Ah ok, Thank you

Trying_to_be_good

stephenni1971 wrote: »

In laymans terms you are not paying tax on the amount of the advance - the tax is calculated on the interest you would have paid had it been a normal loan.

And HMRC use their own interest rate, which is 3.25% for 14/15 - so the monthly tax charge should be the Service Person's top tax rate x 3.25% x outstanding loan balance divided by 12 months:

40% x 3.25% x £25,000 / 12 months = £27 per month, by my maths

And this would reduce as the outstanding loan amount reduced (assuming the interest rate stays the same).

Mrs_Shoes

Trying_to_be_good wrote: »

And HMRC use their own interest rate, which is 3.25% for 14/15 - so the monthly tax charge should be the Service Person's top tax rate x 3.25% x outstanding loan balance divided by 12 months:

40% x 3.25% x £25,000 / 12 months = £27 per month, by my maths

And this would reduce as the outstanding loan amount reduced (assuming the interest rate stays the same).

Thank you for explaining that, everyone on here is really helpful!

EmmEve

Does anyone know which companies are offering mortgages with this scheme? We had a mortgage agreed in principle with barclays but when I enquired about this scheme I have been told they are not participating and head office are not even aware of it! We want to look elsewhere but I'm not sure how to find out who is supporting it.

Mrs_Shoes

EmmEve wrote: »

Does anyone know which companies are offering mortgages with this scheme? We had a mortgage agreed in principle with barclays but when I enquired about this scheme I have been told they are not participating and head office are not even aware of it! We want to look elsewhere but I'm not sure how to find out who is supporting it.

We've gone through a company who deal specifically with mortgages etc for the Forces and our DIP was from Halifax and I therefore assume our mortgage will be the same.

luke_bristol

I'm also looking to use this scheme, I've provided all the details to the mortgage adviser at halifax and not heard a whisper :mad:

Very frustrating, as I have found the house I want to buy and want to get everything in place come April the 1st so I can get started straight away, don't want the house selling in the meantime