Staff Mortgage and Benefit in Kind 30 August 2015 at 6:47PM in Mortgages & endowments 2 replies 645 views

kam1977

Hi

Can someone please confirm if my basic understanding is along the right lines? I am looking at taking out a mortgage with my employer a well known bank. I will be the only person on the mortgage. I am a basic rate tax payer if I took out a mortgage with my employer and this was £100 a month less than the limit HMRC sets does this mean I would pay 20% tax on the £100 ? So essentially I receive £20 a month less in my salary but am still £80 a month better off? I know this is quite simplistic but am I on the right lines or not?

Thanks for help in advance

Kirsty

MDMD

HMRC will regard this as a beneficial loan (as you said)

Broadly, assuming it is above the £10k minimum limit, you will pay tax on the difference between the rate of interest you pay and their 'official' rate of 3%. The opening year is a bit different so I'd ask your payroll if they can estimate the BIK. You can have a go yourself if you search for 'P11d working sheet 4'. You pay tax on this amount at your marginal rate.

You need to tell HMRC during the year if you want your pay to be adjusted via the tax code or HMRC will assess at the end of the tax year.

Thrugelmir

Depending on the rate you can obtain in the open market opting for a staff mortgage may not be beneficial. What will you employer offer you as an non employee mortgage option?