Offset mortgages

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
Just a theoretical situation that I don't know the answer to.

If a client has an offset mortgage, do you put any bank interest on the tax return? The way I see it they have earned interest which is liable to tax but the mortgage interest isn't (if it's not a rental property).

What do you do? It isn't a situation I've come across before so I haven't even seen a statement to know if interest is detailed on it.

Any clues??

Annette

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Offset mortgages

    Hi Annette

    Surely no interest has been earned, so therefore it can't be put on the return.... all that has happened is that they have less interest to pay on their mortgage

    I think that is how I would treat it - on the premise that you don't HAVE to put money into an interest bearing account - if they just left the cash sitting in a bog standard business account there wouldn't be any interest earned.

    My tuppence worth anyhow - maybe others will take a different view!

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Offset mortgages

    The way I see it is that the whole point of an offset mortgage is that you don't have to pay tax on interest, so no, I wouldn't include it. I've got an offset mortgage & I'm sure I don't receive statements showing how much interest I would have earned (or maybe that's just because I've spent too long in the red!).

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Offset mortgages

    I agree. We have an offset mortgage - sold (amongst other things) on the idea that no interest is earned so there is no taxable income.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Whoops - duplcate deleted
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Offset mortgages

    My general thoughts were what you all say but it's nice to have it confirmed.

    Thanks
    Annette

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