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Income Tax (Earnings and Pensions) Act 2003

Section 176: Exception for loans on ordinary commercial terms

680.This section deals with employers whose business includes the lending of money by preventing loans made on ordinary commercial terms from being taxable cheap loans. It derives from section 161B of, and Schedule 7A to, ICTA.

681.Subsection (1) provides that a loan on commercial terms is not a taxable cheap loan.

682.Subsection (2) provides a definition of “loan on ordinary commercial terms” which includes three conditions.

683.Subsections (3) to (7) set out those conditions and define terms used in them.

684.Subsection (8) provides that certain incidental expenses are to be ignored in determining, for the three conditions in subsection (2), whether loans are made or exercisable on the same terms or conditions.

685.Subsection (9) requires that certain amounts arising from variation of a loan are ignored for the purposes of ascertaining, for the second and third conditions, whether loans are held or exercised on the same terms.

686.Subsection (10) defines “member of the public” for the purposes of this section.

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