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Income Tax (Earnings and Pensions) Act 2003

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Changes over time for: Section 187

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Point in time view as at 22/07/2020.

Changes to legislation:

Income Tax (Earnings and Pensions) Act 2003, Section 187 is up to date with all changes known to be in force on or before 06 March 2025. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

187Aggregation of loans by close company to directorU.K.
This section has no associated Explanatory Notes

(1)This section applies where, in relation to any tax year, there are employment-related loans between the same lender and borrower which are aggregable with each other.

(2)The lender may elect for aggregation to apply for that tax year in the case of the borrower.

(3)The effect of the election is that all the aggregable loans are to be treated as a single loan for the purposes of—

  • section 175 (benefit of taxable cheap loan treated as earnings),

  • the provisions of this Chapter relating to the calculation of the cash equivalent of the benefit of a taxable cheap loan, and

  • section 184 (interest treated as paid).

(4)For this purpose loans are aggregable for any tax year if they are made in the same currency and all the following conditions are met in relation to each of them—

(a)there is a time in the tax year when—

(i)the loan is outstanding,

(ii)the lender is a close company, and

(iii)the borrower is a director of that company;

(b)at all times in the tax year the rate of interest on the loan is less than the official rate applying at that time;

(c)the loan is not a qualifying loan within the meaning of section 180 (see section 180(5)).

(5)An election under this section must be made by the lender in a notice given—

(a)to [F1an officer of Revenue and Customs] , and

(b)before 7th July after the end of the tax year to which the election relates.

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