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Income Tax (Earnings and Pensions) Act 2003

Section 180: Threshold for benefit of loan to be treated as earnings

698.This section prevents a tax charge on small amounts by providing a £5,000 threshold which applies in two circumstances. It derives from sections 161 and 161A(1) of ICTA.

699.Subsection (1) sets out the circumstances in which the cash equivalent is not treated as earnings.

700.Subsection (2) provides that all taxable cheap loans are aggregated to find whether the normal £5,000 threshold is exceeded for the purposes of subsection (1)(a).

701.Subsection (3) describes how the alternative threshold in subsection (1)(b) is calculated. This applies when the loan is a non-qualifying loan and total taxable cheap loans exceed the threshold. If qualifying loans are deducted and the total is then less than £5,000 the cash equivalent of the non-qualifying loans is not treated as earnings. That reflects the Inland Revenue practice of ignoring excepted loans and is a minor change to the law. See Change 30 in Annex 1.

702.Subsections (4) and (5) define “non-qualifying loan” and “qualifying loan”.

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