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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Particular benefits: loans written off: loans made by trustees of settlement of which borrower or their spouse is a settlor

Section 189(3) ITEPA 2003

Where tax liability has arisen under Section 633 IT(TOI)A 2005 (Section 677 ICTA1988) on part or all of the loan released or written off, only the excess of the amount released or written off over the amount already taxed is chargeable under Section 188(1) ITEPA 2003 (see EIM21741).

Broadly Section 633 is relevant where a loan is made or a capital sum is paid:

  • by the trustees of a settlement of which the director or his spouse is the settlor, or
  • by a body corporate connected with such a settlement.