SCHEDULES
F1F1SCHEDULE 7
PART II CALCULATION OF CASH EQUIVALENT OF LOAN BENEFIT
Normal method of calculation (averaging)
4
F21
In the absence of a requirement or election that paragraph 5 below should apply, the amount of interest at the official rate payable on a loan for any year (“the relevant year”) shall be ascertained as follows—
a
take half the aggregate of—
i
the maximum amount of the loan outstanding on 5th April preceding the relevant year or, if it was made in that year, on the date on which it was made, and
ii
the maximum amount of the loan outstanding on 5th April in the relevant year or, if the loan was discharged in that year, the date of discharge;
b
multiply that figure by the number of whole months during which the loan was outstanding in that year, and divide by 12;
c
multiply the result by the official rate of interest in force during the period when the loan was outstanding in that year or, if the official rate changed during that period, the average rate during that period ascertained by reference to the number of days in the period and the number of days for which each rate was in force.
For the purposes of this paragraph, months begin on the sixth day of the calendar month.
F32
Where an employment-related loan is replaced, directly or indirectly—
a
by a further employment-related loan, or
b
by a non-employment-related loan which in turn is, in the same year of assessment or within 40 days thereafter, replaced, directly or indirectly, by a further employment-related loan,
sub-paragraph (1) above applies as if the replacement loan or, as the case may be, each of the replacement loans were the same loan as the first-mentioned employment-related loan.
3
For the purposes of sub-paragraph (2) above “employment-related loan” means a loan the benefit of which is obtained by reason of a person’s employment (and “non-employment-related loan” shall be construed accordingly).
4
The references in sub-paragraph (2) above to a further employment-related loan are to an employment-related loan the benefit of which is obtained by reason of—
a
the same or other employment with the person who is the employer in relation to the first-mentioned employment-related loan, or
b
employment with a person who is connected (within the meaning of section 839) with that employer.
Schs. 6, 6A, 7, 7A repealed (6.4.2003 with effect in accordance with s. 723(1) of the repealing Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 6 paras. 110, 111, Sch 8 Pt. 1 (with Sch. 7)