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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
Updated
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The benefits code: beneficial loans: exemption for commercial loans: what are comparable loans?

Section 176(4) ITEPA 2003For the purposes of exemption under Section 176(1) ITEPA 2003 (see

EIM26158) a loan is comparable with another if they are made:
* for the same or similar purposes and * on the same terms and conditions.The words the same or similar purposes have their ordinary common-sense meaning. A loan to buy shares in one company is made for a similar purpose to a loan to buy shares in another company. A loan to buy a holiday is not made for a similar purpose to a loan to buy a house.

The words on the same terms and conditions mean just what they say. If two loans are:
* made on the basis of different lending criteria, or * carry interest at different rates, or * have different terms as to repayment or securitythey are not made on the same terms and conditions.

Similarly, since any fees charged in connection with the making of a loan (for example, valuation fees, administration or arrangement fees, reservation or booking fees) are part of the terms and conditions of the loan, a loan where no such fees are charged cannot, by definition, have been made on the same terms and conditions as one where such fees are charged. Any agreement to share a commission on the granting of a loan is part of the terms of the making of the loan. So if, on the giving of a loan, an employer shares commission with one of its employees, but does not share it with members of the public at large (or does so less favourably), then the loans are not comparable even if they are identical in other respects.