Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Makes one think, if you have an offset mortgage, you can loan funds from your Ltd into your offset account and therefore reduce/negate the mortgage interest payments. You have to weigh up how much you actually save though.
Assuming £100k mortgage at 3%: this equates to interest payments of £250/month payable to the lender. This is sunk money, never to be seen by you again.
Taking a director's loan to use as mortgage offset: £100k at 3% (to avoid BIK) means financing cost on this loan of £250/month, which you pay into your company. At 20% CT this costs £50/month in corporation tax. The remaining £200/month remains in your company, to be extracted at your marginal rate of tax - perhaps 7.5% on the new dividend rules - so £15/month dividend tax on the £200. Total cost of loan per month is therefore £65.
Over the year you save (250 x 12) - (65 x 12) = £2,200.
Just make sure you put the funds back into your Ltd company account before the deadline. And then extract again after whatever time is deemed reasonable.
Wonder if that'd work....
I remember there being posts alluding to setting up a deed of trust to shift money from a business --> personal account and use the ringfenced money to offset against a mortgage. No idea if anyone has done this in practice, however.
Comment