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HMRC internal manual

Employment Income Manual

Particular benefits: loans written off: exceptions from charge

Sections 174(5), 188(1) and 190 ITEPA 2003

There are 2 exceptions to the charge on a director or employee (except for 2015 to 2016 tax year and earlier one in an excluded employment), in respect of the release or writing off of a loan.

Loan to a relative written off (section 174(5) ITEPA 2003)

No charge arises on the release or writing off of a loan made to a relative if it can be shown that the director or employee derived no personal benefit from the loan. Such claims should be looked at in the light of the guidance at EIM26112 and EIM26150.

Loan written off on death of director or employee (section 190 ITEPA 2003)

No charge arises where a loan is waived or written off on or after the death of the director or employee to whom the loan was made.

Note however that the death of a relative to whom a loan has been made does not prevent a tax charge. The director or employee whose relative has died remains chargeable in respect of the loan written off.