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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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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
Total £15,000

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.