The benefits code: beneficial loans: exemptions from charge: small non-qualifying loans: example
Section 180(1)(b) ITEPA 2003
This example demonstrates the exemption of small non-qualifying loans (see EIM26145) when the total balances on all loans exceed £10,000 but the total balances on non-qualifying loans do not (£5,000 for 2013/14 and earlier tax years).
An employee had three interest-free loans from her employer as follows:
|### Purpose||### Maximum balance outstanding|
|To buy a life annuity||£10,000|
|To buy a boat||£3,000|
|To buy a season ticket||£2,000|
Since the maximum total balance outstanding in the year exceeds £10,000, exemption under Section 180(1)(a) ITEPA 2003 is not due (see EIM26140).
However, the annuity loan is a qualifying loan and but for it the maximum total balance outstanding in the year would be £5,000. Since this total does not exceed £10,000, exemption under Section 180(1)(b) is due in respect of the non-qualifying loans (the boat and season ticket loans). The annuity loan will be charged as if it were the only beneficial loan.