Offset Mortgages

[Alan @ BroomeAffinity]

I am being told by a client that his bank is allowing him to use the balances in his company accounts to offset against his new mortgage. I don't like the sound of it and have done a bit of research online - both CUK and the wider web - and can't find anyone saying this is anything other than unacceptable.

Are there any mortgage experts around to give a view?

TIA

[Advocate]

I am being told by a client that his bank is allowing him to use the balances in his company accounts to offset against his new mortgage. I don't like the sound of it and have done a bit of research online - both CUK and the wider web - and can't find anyone saying this is anything other than unacceptable.

Are there any mortgage experts around to give a view?

TIA

I'd stop doing it if I were you...

[Olly]

which bank is that then?

[Alan @ BroomeAffinity]

Advocate, its genuinely not me.

Olly, its the Clydesdale Bank but I suspect that it may be a ill-advised (and therefore ill-advising) adviser that isn't grasping the legal difference between company and person. I know you can offset sole trader accounts for example and I think that the adviser is perhaps confusing this.

[northernladuk]

If you use your companies money to save yourself money you are eligible to pay tax on the savings you make which often will be worse than not doing it. Don't claim it and you are evading tax which is very bad.

You are you and you have your money. The company is a company and it is the companies money. You can't start forgeting that break or else you really will come unstuck. Would you work for a company where all the money being earnt is paying off the directors mortgage?

You could take a directors loan of 5k tak free and use that but if you repay at end of year and take it out again HMRC will take a very dim view of it. It is supposed to be a loan for odd things not a running loan that you fudge by repaying.

[Alan @ BroomeAffinity]

I'm aware of the tax issues and have advised the client of those. My concern is that the bank is making an almighty cock-up with this and that my client isn't the only one being told this.

[Olly]

Think about it for a second though.....if the bank want to give you a discount on your mortgage based on the fact you keep your Ltd's money there too or that you have a nice teeth or because you're born on a Friday it's up to them.

Ok so I know that's not the case and tax is what it is....but I do wonder if the bank aren't trying to bend the rules rather than out and out not know that it's "wrong".

On an aside, how would HMRC ever know you're getting a cheap mortgage?

[Alan @ BroomeAffinity]

On an aside, how would HMRC ever know you're getting a cheap mortgage?

Becuase its a BiK and you'd be required to declare it. If you didn't you'd be evading tax.

[northernladuk]

Think about it for a second though.....if the bank want to give you a discount on your mortgage based on the fact you keep your Ltd's money there too or that you have a nice teeth or because you're born on a Friday it's up to them.

There is a difference between them giving you a dicount for your custom and them allowing you to use your companies money against a personal mortgage. It would be immoral of them let alone bordering on illegal to use a companies money against personal stuff even if it is your business surely. They above all should know the difference between personal and business money even if people here don't?

Now IF this was allowed and bank would use my companies money against my mortgage I would sign up so fast the ink wouldn't dry!!!!!

[Olly]

Becuase its a BiK and you'd be required to declare it. If you didn't you'd be evading tax.

so the only way they'd know is if they were told be the person benefiting...hmmm

look I know it's what we all think is against the rules but we also all know the rules are not always cut and dry.

I'll be watching how this one develops intently as I too would be very very interested in such a scheme