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

Chapter 7Taxable benefits: loans

Introduction

174Employment-related loans

(1)

For the purposes of this Chapter an employment-related loan is a loan—

(a)

made to an employee or a relative of an employee, and

(b)

of a class described in subsection (2).

(2)

For the purposes of this Chapter the classes of employment-related loan are—

A

A loan made by the employee’s employer.

B

A loan made by a company or partnership over which the employee’s employer had control.

C

A loan made by a company or partnership by which the employer (being a company or partnership) was controlled.

D

A loan made by a company or partnership which was controlled by a person by whom the employer (being a company or partnership) was controlled.

E

A loan made by a person having a material interest in—

(a)

a close company which was the employer, had control over the employer or was controlled by the employer, or

(b)

a company or partnership controlling that close company.

(3)

In this section—

“employee” includes a prospective employee, and

“employer” includes a prospective employer.

(4)

References in this section to a loan being made by a person extend to a person who—

(a)

assumes the rights and liabilities of the person who originally made the loan, or

(b)

arranges, guarantees or in any way facilitates the continuation of a loan already in existence.

(5)

A loan is not an employment-related loan if—

(a)

it is made by an individual in the normal course of the individual’s domestic, family or personal relationships, or

(b)

it is made to a relative of the employee and the employee derives no benefit from it.

(6)

For the purposes of this section a person (“X”) is a relative of another (“Y”) if X is—

(a)

Y’s spouse,

(b)

a parent, child or remoter relation in the direct line either of Y or of Y’s spouse,

(c)

a brother or sister of Y or of Y’s spouse, or

(d)

the spouse of a person falling within paragraph (b) or (c).