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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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The benefits code: beneficial loans: meaning of “employment-related loan”

Section 174(1) and (2) ITEPA 2003

The rules on beneficial loans apply only to an “employment-related loan” which is a “taxable cheap loan” (EIM26102).

An employment-related loan is a loan made to an employee, or a relative (EIM26112) of an employee, which is made by one of the following -

  • the employee’s employer or a prospective employer (but there is an important exception to this rule at EIM26114), or
  • a company or partnership:

    • controlled by the employer, or
    • by which the employer is controlled, or
    • under the same control as the employer
  • a person having a material interest in a close company or in another company or partnership controlling that close company and the employee’s employer:

    • is that close company, or
    • controls it, or
    • is controlled by it.

But note the exception to this rule explained at EIM26115.

The extended meaning of making a loan at EIM26110 applies for the purpose of these rules.

Also see EIM26110 for details of the relationship between the rules on employment income provided through third parties and the rules on employment-related loans.

For the meanings of material interest in a close company and control see EIM20212 to EIM20213.