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Income Tax (Earnings and Pensions) Act 2003

Section 174: Employment-related loans

669.This section sets out the basis on which a loan comes within the provisions of this Chapter. It derives from sections 160 and 161 of and paragraphs 1 and 2 of Schedule 7 to ICTA.

670.Subsection (1) describes loans which are employment-related. The fact that the loan is made to “an employee or a relative of an employee” indicates that at the time the loan is made there must be an employment.

671.Subsection (2) defines “employment-related loans” and the working of this subsection is illustrated by the flow diagram on page 76.

672.Subsection (3) provides that if a loan is made to an employee in anticipation of the employment commencing it is an employment-related loan, provided the employment is taken up. It derives from paragraph 2 of Schedule 7 to ICTA.

673.Subsection (4) provides that loans made by a person who was not the original lender or who facilitates the continuation of an existing loan fall within the section.

674.Subsection (5) excludes from the charge certain loans of a personal or domestic nature.

675.Subsection (6) defines what is meant by a “relative” for the purposes of the section.

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