Taxable benefit in kind for staff based mortgages

The request was successful.

Dear Her Majesty’s Treasury,

I refer to a previous FOI request made to HM Revenue and Customs in 2012 regarding tax paid on staff based mortgages. Please see the following link for more detailed information on that query for which this relates - https://www.whatdotheyknow.com/request/r...

I cannot understand why The Treasury is applying a punitive benchmark reference rate for staff based loans / mortgages. My employer offers a rate of 1.5% above base rate (0.5%) therefore equating to 2% at present rates (10 Sept 2014). The effective tax rate is actually much higher at 2.5% because your the Treasury has arbitrarily felt that this is such a fantastic idea that staff should actually pay more than what is actually available in the market to ordinary people.

The reference rate was recently reduced from 4% to 3.25%, thereby making employees pay the difference between the rate offered by their employer and the 3.25% reference rate multiplied by their marginal tax rate. In this case, I would be paying 2.5%.

Many banks are offering variable rate which are 1.99% (HSBC) and even fixed rates for less than this.

Under the FOI Act, please indicate:

1. Who is responsible for overlooking this flawd policy i.e. which team within the Treasury and the name of the person or team heads?

2. How often is it reviewed?

3. Is it currently tabled to be reviewed again, and if so when will it next be reviewed and what rate will it change to?

4. What is the actual policy in setting and reviewing the reference rate i.e. methodology? Does someone wake up one morning and decide an unrealistic reference rate based on which way the wind blows, because since 2008 when rates have come to historic lows, the reference rate has hardly kept pace to reflect a realistic level in the general market. In other words, having a staff based mortgage has NO cost benefit and is a lose - lose situation for both the employee and taxman because there savings are either nil or negligible as it#s cheaper to opt for a regular market competitive NON-staff based mortgage

5. Are the plans to changes this methodology of setting reference rates to something a) more realistic and b) something more equitable? If so, when?

Yours faithfully,

D Ahmad

Enquiries, CEU - HMT, HM Treasury

Dear Mr Ahmad,

Thank you for your Freedom of Information request. I write to confirm receipt of your request and to inform you that it is receiving attention. If you have any enquiries regarding your request do not hesitate to contact me.

Ava Rose.

Correspondence and FOI Support Officer,

HM Treasury.

Ava Rose | Correspondence & Information Rights Team | HM Treasury | 1 Horse Guards Road, London, SW1A 2HQ | www.gov.uk/hm-treasury

show quoted sections

responses, FOI - HMT, HM Treasury

1 Attachment

Dear Mr Ahmad

 

Please find attached a response to your FOI request.  Below is a clickable
version of the link contained in the letter.

 

 

[1]http://www.bankofengland.co.uk/boeapps/i...

 

Regards

 

 

 

Information Rights Unit| HM Treasury, 1 Horse Guards Road, SW1A 2HQ

 

 

 

 

show quoted sections

Dear Her Majesty’s Treasury,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Her Majesty’s Treasury's handling of my FOI request 'Taxable benefit in kind for staff based mortgages'.

You have partially answered some of the questions while avoiding the others, including whether the rate will be revised again soon.

Pls answer all the questions.

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/t...

Yours faithfully,

Danish Ahmad

Enquiries, CEU - HMT, HM Treasury

Dear Sir

Thank you for your request for an Internal Review (IR). I write to confirm receipt of your request and to let you know that it is receiving attention. Although IR requests have no statutory deadline, we do aim to follow Ministry of Justice best practice guidelines, which suggest that:  
•         simple reviews should aim to be dealt with within 20 working days of receiving the complaint
•         complex reviews – in particular where it is necessary to reconsider the public interest test – should aim to be dealt with within six weeks of receiving the request.
If you have any enquiries regarding your request do not hesitate to contact us.

Regards

Ava | Correspondence & Information Rights | HM Treasury | 1 Horse Guards Road, London, SW1A 2HQ | www.gov.uk/hm-treasury

show quoted sections

Wiltshire, Fay - HMT, HM Treasury

1 Attachment

Dear Mr Ahmad,

Please find attached a response to your internal review request. Below are clickable versions of the link included in our response:

http://data.gov.uk/organogram/hm-treasury

Kind regards

Information Rights Unit | Correspondence and Information Rights Team | Corporate Centre Group | HM Treasury

show quoted sections