Benefit in kind

Samantha26

Hi
Hope can help. I have a mortgage with Santander at 0.25% above base rate of Bank of England. So paying 0.50%. I'm currently on maternity leave and my satutuarty money runs out in June. I have been weighing my options up whether to go back to work due to my mortgage rate.
I called work and have said that my rate will stay the same lifetime of the mortgage whether I decide to leave but told to ring the tax office regarding benefit in kind.
I called the tax office and said that if I no longer work and leave will not pay the benefit in kind tax.
Explained it's a joint mortgage and my husband works but not for a bank and pays 40% tax but says because benefit in kind in my name doesn't count.
So confusing why have I been paying benefit in kind if Rate stays the same. Basically need to know if I decide to leave will we need to pay extra due to the tax
Hope can help. Big decision to make if someone gives me the wrong information
Hope can help
Sam

AnotherJoe

I guess you could have started by making it clear you work for Santander, or at least thats what I've puzzled out from your post. Is that correct?

And when you said "I called the tax office and said that if I no longer work and leave will not pay the benefit in kind tax." does that mean, you called them and told them that you didn't expect to pay the BIK, or did they tell you that, or were you asking?

And are you asking why you have been paying BIK when working but wont when you arent working? Because it seems to me fairly clear, if you arent employed there, then by definition there is no BIK and the HMRC website says anyway "benefits in kind will not be taxed for people who earn less than their personal allowance." which presumably if you are thinking of giving up work, applies to you?

Samantha26

Yes I do sorry.
I called the tax office to enquire where I would stand in regards financially at the end of my maternity leave I decided not to go back where would I stand with the tax. I get they have said I won't pay BIK if I leave as no longer working.
But what I'm confused is what benefit have I been receiving if my mortgage payments will be staying the same if I leave sorry if sound dumb. I called Santander and asked about whether this will make a difference to my mortgage payments each month but said no just sounds so confusing why I have been paying this ☺️

Samantha26

Just need reassurance before making such a big decision don't want to leave then I get higher mortgage payments or a tax bill in April next year
Thanks
Sam

Thrugelmir

Samantha26 wrote: »

But what I'm confused is what benefit have I been receiving if my mortgage payments will be staying the same if I leave sorry if sound dumb.

As far as the HMRC is concerned you've been receiving a beneficial rate of interest on the mortgage. As the rate you are paying is lower that the current official HMRC rate of 3% (for the 2016/17 tax year). You've been paying tax on the difference between the 2 rates of interest.

Look at your PAYE coding notices that you've been sent by the HMRC. Also your employer should have provided you with a copy of the P11d submission which provides the information to the HMRC. .

Samantha26

Ok thank you very much for your help makes more sense now ����

AnotherJoe

Samantha26 wrote: »

Yes I do sorry.
I called the tax office to enquire where I would stand in regards financially at the end of my maternity leave I decided not to go back where would I stand with the tax. I get they have said I won't pay BIK if I leave as no longer working. Well indeed you wont..

But what I'm confused is what benefit have I been receiving if my mortgage payments will be staying the same if I leave sorry if sound dumb. ahemm

I called Santander and asked about whether this will make a difference to my mortgage payments each month but said no just sounds so confusing why I have been paying this ☺️

.... because you were receiving a benefit as a result of working there there was additional tax to pay!! Thats what "a benefit in kind is" (a tax upon "benefits" you get from your employer other than just money. Otherwise your employer could for example buy all your groceries for you and you would pay no tax on that as you werent getting the money directly.)

BIK doesn't affect your mortgage payments, it affects your tax position.

And even if there was tax to pay, since you will earn under the tax allowance (due to not working) as the HMRC site says, there's no tax payable anyway.