Income and Corporation Taxes Act 1988

161 Exceptions from section 160. U.K.

[F1 (1) The cash equivalent of the benefit of any such loan as is referred to in section 160(1) is not to be treated as emoluments of the employment if—

(a) at no time in the year does the amount outstanding on the loan (or, if two or more such loans as are referred to in section 160(1) are outstanding in the year, the aggregate of the amounts outstanding on them) exceed £5000, or

(b) where paragraph (a) above does not apply, the loan is not a qualifying loan and at no time in the year does the amount outstanding on the loan (or, if two or more such loans as are referred to in section 160(1) and are not qualifying loans are outstanding in the year, the aggregate of the amounts outstanding on them) exceed £5000.

(1A) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1B) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(2) M1 Where the amount of interest paid on a loan for the year in which it is made is not less than interest at the official rate applying for that year for the purposes of section 160 and the loan is made—

(a) for a fixed and unvariable period; and

(b) at a fixed and unvariable rate of interest,

subsection (1) of that section shall not apply to the loan in any subsequent year by reason only of an increase in the official rate since the year in which the loan was made.

(3) Where a loan was made at any time before 6th April 1978—

(a) for a fixed and unvariable period; and

(b) at a fixed and unvariable rate of interest,

section 160(1) shall not apply to the loan if F3 . . . the rate of interest is not less than such rate as could have been expected to apply to a loan on the same terms (other than as to the rate of interest) made at that time between persons not connected with each other (within the meaning of section 839) dealing at arm’s length.

(4) M2 If the employee F4 . . . derived no benefit from a loan made to a relative of his, section 160(1) and (2) above shall not apply to that loan.

(5) Section 160(2) does not apply where the amount released or written off is chargeable to income tax as income of the employee apart from that section, except—

(a) where it is chargeable only by virtue of section 148; or

(b) to the extent that the amount exceeds the sums previously falling to be treated as the employee’s income under section 677.

(6) M3 On the employee’s death—

(a) a loan within subsection (1) of section 160 ceases to be outstanding for the purposes of the operation of that subsection; and

(b) no charge arises under subsection (2) of that section by reference to any release or writing-off which takes effect on or after the death.

(7) M4 Section 160(2) does not apply to benefits received in pursuance of arrangements made at any time with a view to protecting the holder of shares acquired before 6th April 1976 from a fall in their market value.

Textual Amendments

F1 S. 161(1)(1A)(1B) substituted for s. 161(1) (with effect in accordance with s. 88(6) of the amending Act) by Finance Act 1994 (c. 9), s. 88(3)(5)

F2 S. 161(1A)(1B) repealed (with effect in accordance with s. 57(2) of the repealing Act) by Finance Act 2000 (c. 17), ss. 57(1), 156, Sch. 10 para. 5(4), Sch. 40 Pt. 2(2), Note

F3 Words in s. 161(3) repealed (with effect in accordance with s. 134(2) of the repealing Act) by Finance Act 1996 (c. 8), ss. 134(1), 205, Sch. 20 para. 9(a), Sch. 41 Pt. 5(10), Note

F4 Words in s. 161(4) repealed (with effect in accordance with s. 134(2) of the repealing Act) by Finance Act 1996 (c. 8), ss. 134(1), 205, Sch. 20 para. 9(b), Sch. 41 Pt. 5(10), Note

Marginal Citations

M1 Source—1980 s.50(2), (3)

M2 Source—1976 s.66(4), (5)

M3 Source—1976 s.66(7)

M4 Source—1976 s.66(11)(b)