Finance Act 1996

107 Beneficial loans

(1) For section 160(1B) of the Taxes Act 1988 (aggregation of loans) there shall be substituted the following subsections—

“(1B) Where, in relation to any year—

(a) there are loans between the same lender and borrower which are aggregable with each other,

(b) the lender elects, by notice given to the inspector, for aggregation to apply in the case of that borrower, and

(c) that notice is given before the end of the period of 92 days after the end of that year,

all the loans between that lender and that borrower which are aggregable with each other shall be treated for the purposes of subsections (1) and (1A) above and Part II of Schedule 7 as a single loan.

(1BA) For the purposes of subsection (1B) above loans are aggregable with each other for any year where—

(a) in the case of each of the loans, there is a time in that year, while the loan is outstanding as to any amount, when the lender is a close company and the borrower a director of that company;

(b) the benefit of each of the loans is obtained by reason of the borrower’s employment;

(c) in the case of each of the loans, there is no time in that year when a rate of interest is applied to the loan which is equal to or more than whatever is the official rate at that time;

(d) the loans are loans made in the same currency; and

(e) none of the loans is a qualifying loan.”

(2) In paragraph 5 of Schedule 7 to that Act (alternative method of calculation)—

(a) in sub-paragraph (1)(a), for the words from “for the purpose” to “appeal)” there shall be substituted “at a time allowed by sub-paragraph (2) below”; and

(b) in sub-paragraph (1)(b), for “within the time allowed by sub-paragraph (2) below” there shall be substituted “at such a time”.

(3) For sub-paragraph (2) of that paragraph there shall be substituted the following sub-paragraph—

“(2) A notice containing a requirement or election for the purposes of sub-paragraph (1) above is allowed to be given at any time before the end of the period of 12 months beginning with the 31st January next following the relevant year.”

(4) This section has effect for the year 1996-97 and subsequent years of assessment and applies to loans whenever made.