The benefits code: beneficial loans: exemptions from charge: small loans: example
Section 180(1) ITEPA 2003
This example shows how the exemption for small loans (where the total balance on all loans does not exceed £10,000 (£5,000 for 2013/14 and earlier tax years), see EIM26140) applies. An employee had three interest-free loans from his employer as follows:
|### Purpose||### Maximum balance outstanding|
|To pay for home improvements||£4,000|
|To pay for a holiday||£4,000|
|To buy his season ticket||£2,000|
Since the maximum total balance in the year is not more than £10,000 no tax is chargeable under Section 175(1) ITEPA 2003.
Note that if at some time in the year the balances were:
|Home improvements loan||£4,100|
|Season ticket loan||£1,975|
exemption under Section 180(1) ITEPA 2003 would not be due because the total balance has exceeded £10,000. See EIM26145 where the total balance exceeds £10,000, but the total of non-qualifying loans (see EIM26137) does not.