Interest-free home loans to escape tax
The government is to announce key tax incentives to boost its starter home initiative for teachers, policemen and other key workers within the next 48 hours, Accountancy Age has learned.
Officials this week said that interest-free loans for public sector workers to buy homes in high cost areas, expected to be announced at the end of this week, will be tax free.
The move will remove growing concerns that the loans would be taxed as a benefit-in-kind.
The much-touted loans of Pounds 10,000 would have incurred income tax of Pounds 132 and employers’ national insurance of Pounds 71 if viewed as a benefit-in-kind, according to Maurice Fitzpatrick, head of economics at Tenon, the professional services group.
But uncertainty remains. While a government spokesman told Accountancy Age there would be no tax, he refused to divulge details. At the moment the starter homes initiative is aimed at empowering local authorities to aid teachers. But if policemen, nurses, firemen and paramedics are also to be helped a number of government departments will have to come together with the Treasury to make sure legislation targets the right people.
Fitzpatrick said: ‘Only a clause in tax law can change this and that will have to be effected by the Treasury.
‘This is also a job for joined up government because the Treasury will have to liaise with many departments.’
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