Part 3Employment income: earnings and benefits etc. treated as earnings
Chapter 7Taxable benefits: loans
Calculation of amount of interest at official rate
183Alternative method of calculation
(1)
The alternative method of calculating for the purposes of this Chapter the amount of interest that would be payable on a loan for a tax year at the official rate applies for a tax year—
(b)
if the employee so elects, by notice to F1an officer of Revenue and Customs .
(2)
Notice may be given on or before the first anniversary of the normal self-assessment filing date for the tax year in relation to which the question arises whether the loan is a taxable cheap loan.
(3)
The alternative method is as follows—
Step 1
Find for each day in the tax year in question the maximum amount of the loan outstanding on that day and multiply it by the official rate of interest in force on that day.
Step 2
Add together each of the amounts obtained under step 1.
Step 3
Divide the result by the number of days in the tax year.
(4)
Where in any tax year the cash equivalent of the benefit of the same taxable cheap loan is to be treated as earnings of two or more employees then, for the purposes of determining the cash equivalent of the benefit of the loan, the alternative method applies if—
(a)
the notice under subsection (1)(a) is given to all those employees, or
(b)
the notice under subsection (1)(b) is given by all those employees.