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HMRC internal manual

Employment Income Manual

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
Total £10,000

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
Holiday loan £3,950
Season ticket loan £1,975
Total £10,025

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.