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HMRC internal manual

Employment Income Manual

The benefits code: beneficial loans: exemption for commercial loans: loans varied onto commercial terms: meaning of on the same terms

Section 176(6), (7), (8) and (9) ITEPA 2003

The words on the same terms mean just what they say. If two loans are:

  • made, or varied, on the basis of different lending criteria, or
  • carry interest at different rates, or
  • have different terms as to repayment or security

they are not held on the same terms.

However for the purpose of the exemptions for loans varied onto commercial terms (see EIM21670), any amounts incurred by a person to whom a loan is made on:

  • penalties, interest or similar amounts incurred as a result of varying a loan (Section 176(9)) and
  • fees, commission or other incidental expenses incurred for the purposes of obtaining a loan (Section 176(8))

are disregarded when deciding whether rights to vary loans are exercisable on the same terms or whether loans are held on the same terms.

Note that this does not apply to the exemption for employee loans made on commercial terms (see EIM26158 and EIM26159).