Employer Loan/Bonus dilemma - HELP!!

ryanandamy

Hi all - please beware the lengthy post as i try to explain the situation as best i can

My employer has made me 2 different offers to stay at the company i work for (wont go into specifics but its public sector role)

Option 1
base salary + 10K for duration of my employment
The 10k would be subject to tax and NI but not pensionable
I can leave at any point

Option 2
Employer would give me 20k 'loan' which is then paid off with the 10k from option one meaning that i never see this 10k but it wont affect my base salary. This means that i am only taxed at 3% of the balance of the 20k rather than have a 20k lump sum and lose a % of it.
This would require me to tie in for a negotiable number of years
This offer also includes a 5k tax free lump sum for relocation costs - this is something that is reimbursed through receipts. HR tell me i can use this for stamp duty, solicitors fees, surveying fees and furnishing a new property.
If i was to leave before the term then the loan amount would be payable - i have asked HR to give me more detail about how this would work.
I can take the 20k at any point and i presume I could take less if required too

Bit of background info
Started saving for a house deposit but not much in the pot yet
Have an outstanding loan which is 11k and am overpaying this would look to pay this off before trying for a house

really don't know what to do !!
I am thinking of taking the 20k route as then its working for me (either paying off the loan early or earning interest)

Any ideas would be greatly appreciated - this is a big decision and need some advice

Thanks

jonesMUFCforever

Have you worked out how much beneficial loan tax will hit you for? (either option).

ryanandamy

jonesMUFCforever wrote: »

Have you worked out how much beneficial loan tax will hit you for? (either option).

I'm not sure - the HR person says she will go back to finance for an idea but she says that as its a loan i would only be taxed at 3% on the balance of the loan rather than have it appear through my income stream and be taxed the same as salary

jonesMUFCforever

How much is the interest being charged on either option?
Beneficial interest is calculated as interest charged minus official HMRC lending rate (I guess this is where the 3% figure comes from)taxed at your highest rate per year.
Normally this taxed through your PAYE code.
If you need a loan would you qualify for the best market rates with a different lender? (no tax to pay)
You also need clear answers as to what happens in the event of you quitting or getting another job.

TrickyDicky101

The £20k would not be a gift - you would need to repay it eventually. You have factored this in?