Business Offset Mortgage

nick_hill

Hi Folks

This is my first post so be gentle.

I am self employed through my limited company and am looking to remortgage to an offset. I found a couple of lenders (RBS & yorkshire) that offer to offset my business account.

This seems to me like the holy grail for small businesses.

Does anyone have any experience of these?

Many thanks

Nick

payless

Surely in the eyes of the taxman , theres a benefit in kind here, as you ( with I assume your residental mortgage) and the ltd company ( with a credit balance) are separate enties

nick_hill

That what the worry is

I was wanting to use my corp tax and retain profit to offset my residential mortgage

Maybe these only work for commercial mortgages, I'll have to do some more digging

thanks for the reply

Nick

rjm2k1

If it's correct it sounds great, offset before even corporation tax & vat has been paid if the timing is correct! I would check that it's not just commercial mortgages though as I can't see anything on the RBS site which says you can offset a residential mortgage with a business account.

nick_hill

Have a look on here

http://www.bankofscotland.co.uk/corporate/funding-solutions/business-offset/mortgage/index.html

for the bank of scotland product

Nick

Dithering_Dad

I looked into this for my limited company but when I checked out a few of the business accounts that offered offsetting, they were only for sole-traders or partnerships not for people who ran a limited company.

I asked my accountant and he said that where a lot of people fall foul of the revenue is by treating their business account as though it was a personal account. "Basically", he said, "until you take the money out of the business account via a loan, dividend or salary, it's not your money".

I guess the only way to use this sort of offsetting is where you have a BTL that you purchased via your limited company and then you can use your offset against this mortgage - but then if you offset the mortgage interest you'd make more of a profit on the rental money and take a hit on Corporation Tax.

nick_hill

Thanks DD

Just spoken to BOS and when they say "your mortgage" they mean commercial mortgages. So a no go there.

As I said this is the holy grail for small limited companies i.e. it doesn't exist

owner

I use my Ltd company money to offset against my mortgage. You can just transfer the money to the offset account at any time as long as the money is back in the ltd company a/c by company year end. So take the money out in month 1 of the company year and put it back in month 11. This is not counted as a director's loan as the a/c balances at year end.

nick_hill

I'd like to think its that easy but I thought there was a limit of 5k on that kind of transaction?

Nick

owner

What transaction ? That's the point, you haven't used the money just stored it somewhere other than your normal a/c. The year end books tally against the company a/c so everyone is happy.

Dithering_Dad

owner wrote: »

What transaction ? That's the point, you haven't used the money just stored it somewhere other than your normal a/c. The year end books tally against the company a/c so everyone is happy.

until you get an audit from the Revenue...

How can you justify taking what amounts to an interest free loan from your company? You're getting a financial benefit from this, yet not declaring it anywhere.

As I said in my last post, I asked my accountant and he said that I couldn't use the company accounts like a personal bank account and I always had to have enough money in my company to meet it's tax obligations (Corp tax and VAT).

If you contact the Revenue (anonymously of course) and ask them if this is legal I'd be amazed if they said it was. Just because you're doing it and (currently) getting away with it, doesn't make it legal