Part 3

Employment income: earnings and benefits etc. treated as earnings
Chapter 7

Taxable benefits: loans

Introduction

Employment-related loans
174
1
For the purposes of this Chapter an employment-related loan is a loan—
a
made to an employee or a relative of an employee, and
b
of a class described in subsection (2).
2
For the purposes of this Chapter the classes of employment-related loan are—
A
A loan made by the employee’s employer.
B
A loan made by a company or partnership over which the employee’s employer had control.
C
A loan made by a company or partnership by which the employer (being a company or partnership) was controlled.
D
A loan made by a company or partnership which was controlled by a person by whom the employer (being a company or partnership) was controlled.
E
A loan made by a person having a material interest in—
a
a close company which was the employer, had control over the employer or was controlled by the employer, or
b
a company or partnership controlling that close company.
3
In this section—
- “employee” includes a prospective employee, and
- “employer” includes a prospective employer.
4
References in this section to a loan being made by a person extend to a person who—
a
assumes the rights and liabilities of the person who originally made the loan, or
b
arranges, guarantees or in any way facilitates the continuation of a loan already in existence.
5
A loan is not an employment-related loan if—
a
it is made by an individual in the normal course of the individual’s domestic, family or personal relationships, or
b
it is made to a relative of the employee and the employee derives no benefit from it.
6
For the purposes of this section a person (“X”) is a relative of another (“Y”) if X is—
a
Y’s spouse or civil partner ,
b
a parent, child or remoter relation in the direct line either of Y or of Y’s spouse or civil partner ,
c
a brother or sister of Y or of Y’s spouse or civil partner , or
d
the spouse or civil partner of a person falling within paragraph (b) or (c).
Pt. 3 Ch. 7 extended (with modifications) (with effect in accordance with s. 97(3) of the amending Act) by Finance Act 2006 (c. 25), s. 97(1)(2)
Words in s. 174(6) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 141