Part 3Employment income: earnings and benefits etc. treated as earnings

Chapter 7Taxable benefits: loans

Benefit of taxable cheap loan treated as earnings

180Threshold for benefit of loan to be treated as earnings

(1)

F1Section 175 does not have effect in relation to an employee and a tax year—

(a)

if the normal F2£10,000 threshold is not exceeded, or

(b)

where the loan is a non-qualifying loan and that threshold is exceeded, if the F2£10,000 threshold for non-qualifying loans is not exceeded.

(2)

The normal F3£10,000 threshold is not exceeded if at all times in the year the amount outstanding on the loan (or, if two or more employment-related loans which are taxable cheap loans are outstanding in the year, the aggregate of the amount outstanding on them) does not exceed F3£10,000.

(3)

The F3£10,000 threshold for non-qualifying loans is not exceeded if at all times in the year the amount outstanding on the loan (or if two or more employment-related loans which are non-qualifying loans are outstanding in the year, the aggregate of the amounts outstanding on them) does not exceed F3£10,000.

(4)

In this section a “non-qualifying loan” means a taxable cheap loan which is not a qualifying loan.

(5)

For the purposes of this section a loan is a “qualifying loan” in relation to a particular tax year if, assuming interest is paid on the loan for that year (whether or not it is in fact paid), the whole or part of that interest—

(a)

is eligible for relief under section 353 of ICTA F4or section 383 of ITA 2007 (relief for interest payments),

(b)

would be eligible for relief under F5section 353 of ICTA but for the fact that it is a payment of relevant loan interest to which section 369 of ICTA applies (mortgage interest payable under deduction of tax),

(c)

is deductible in computing the amount of the profits to be charged F6to tax in respect of a trade, profession or vocation carried on F7wholly or partly in the United Kingdom by the person to whom the loan is made, or

(d)

is deductible in computing the amount of the profits to be charged F8to tax in respect of a UK property business F9(within the meaning of Chapter 2 of Part 3 of ITTOIA 2005 or Chapter 2 of Part 4 of CTA 2009) carried on by that person.