Part III Income Tax, Corporation Tax and Capital Gains Tax
Benefits in kind
45 Beneficial loan arrangements: replacement loans.
1
In Chapter II of Part V of the Taxes Act 1988 (benefits in kind, &c.), section 160 (beneficial loan arrangements) is amended as follows.
2
In subsection (5) (interpretation), paragraph (b) (references to loan to include any replacement loan) shall cease to have effect.
3
After subsection (3) (deemed continuance of employment to which that Chapter applies) insert—
3A
Where subsection (3) above applies, a loan which—
a
is applied directly or indirectly to the replacement of any such loan as is mentioned in paragraph (a) of that subsection, and
b
would, if the employment referred to in that subsection had not terminated or, as the case may be, ceased to be employment to which this Chapter applies, have been a loan the benefit of which was obtained by reason of that employment,
shall, unless it is a loan the benefit of which was obtained by reason of other employment, be treated as a loan the benefit of which was obtained by reason of that employment.
4
In paragraph 4 of Schedule 7 to the Taxes Act 1988 (loans obtained by reason of employment: normal method of calculation of benefit (averaging)), make the present provision sub-paragraph (1) and after it insert—
2
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.
5
The above amendments have effect for the year 1995-96 and subsequent years of assessment and apply to loans whether made before or after the passing of this Act.