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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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The benefits code: beneficial loans: identifying the loan

The identification of the loan or loans made is a crucial step in the process of dealing with beneficial loans.

A loan (but not necessarily a debt consisting of some other form of credit, see EIM26108) is always created by an agreement between the borrower(s) and the lender(s). It is the agreement that sets out the scope of the loan.

The terms of an agreement for a loan may take any one of a variety of forms. For example, they may provide that the loan is effectively to be divided into segments for the purposes of:

  • calculating interest payable and/or
  • securing it on assets and/or
  • accounting.

So a single loan may:

  • be represented by two or more accounts and/or
  • bear interest on different segments at different rates and/or
  • be secured on two or more assets.

In spite of all these factors, if the agreement under which it is made and accepted is an agreement for a single loan, it will remain a single loan and be treated as such for all the purposes of Section 175 ITEPA 2003 unless and until it reaches the point where it falls to be aggregated with other loans in the calculation of the cash equivalent (see EIM26200 onwards).

Just as a single loan may involve two or more accounts, rates of interest and forms of security, so two or more separate loans may be:

  • subject to the same terms as regards interest and/or
  • secured on the same asset and/or
  • held in the same account (although this last is unlikely in practice).


especially that the fact that two or more separate loans may be aggregated for a particular purpose of the Income Tax (Earnings and Pensions) Act 2003 (for example computing interest relief) does not make them a single loan or mean that they can be treated as such for any other purpose.

Each form of credit other than a loan is a single loan for the purposes of Section 175. So a series of similar forms of credit (for example, the provision of a monthly service on credit) is for those purposes a series of separate single loans.