Benefit in Kind help needed

Pie_in_the_Sky

Hi,

I am looking for some help and guidance please. I have the opportunity to get a staff rate mortgage at 3% on £120k. I understand this will be subject to BIK. Can someone help -

1) how can I work out how much tax I will pay on the 'benefit' so I can compare with other products?

2) how can I work out the APR?

3) it will be a joint mortgage with my wife, what are the likely tax implications for us both (I pay 20% and she pays 40%)


Any help would be appreciated as we are really confused!!

Thrugelmir

The BIK will be yours alone.

HMRC beneficial loan rate is 3.25% for the tax year 2014/15. I don't think next years rate has been set yet. Possibly may continue as is.

As an example if your staff rate is 2% and your mortgage is £100k.

Then the BIK will be (3.25% - 2%) = 1.25% times £100,000 = £1,250.

£1,250 @ 20% = £250 (or £20.83p a month).

Your employer will inform the HMRC every year and they'll adjust your tax code to collect the tax due.

kingstreet

You don't need the APR.

Just use the rate and the fees.

As APRs include the follow-on rate, which means SVR for most lenders/products which most people can avoid paying, it's a pointless figure for long-term credit.

If you really want the APR for this staff deal, request a KFI and see box 5.