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HMRC internal manual

Employment Income Manual

The benefits code: beneficial loans: exemptions from charge: loans for fixed periods at fixed rates of interest: example

Section 177 ITEPA 2003This example demonstrates the exemption for fixed interest/fixed period loans set out at


An employee obtains a loan at a fixed and invariable rate of interest exceeding the official rate for that year. The loan is for a fixed and invariable period. The employee had an offer of a loan on the same terms from a high street bank but decided to take the loan from his employer instead.

No chargeable benefit arises for the year the loan was made or for any subsequent year even if the rate of interest he pays in any subsequent year is below the amount of interest at the appropriate official rate for that year.