Yes. It will be taxed as a benefit in kind.

I believe the official HMRC rate is 3.25%, implying a value of £650 which will be the amount taxed at your highest rate.

I don't think it's very wise to use the loan as a deposit because what you are in fact doing is borrowing money to borrow more money from the bank. As I understand they are likely to ask about its source.


Ok so, I would be taxed on £650 only? So if salary is 20k (for example), I would be taxed on 20650? Sorry....tax is a minefield for me....
Originally posted by thelinds


It's an annual benefit and will reduce as the debt reduces.

But I still think you're going to struggle to use this money as a deposit.

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