Income Tax (Earnings and Pensions) Act 2003

174 Employment-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(a) assumes the rights and liabilities of the person who originally made the loan, or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).