Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Employment Income Manual

HM Revenue & Customs
, see all updates

The benefits code: beneficial loans: order of repayment of successive loans: rule in Clayton's case


Where the accounting between the borrower and the lender is carried out in the same wayas that between a bank and its customers on a normal current account, the rules set out in EIM26260 are varied.

The treatment in such circumstances was laid down in the ‘Rule in Clayton’s Case’ (Devaynes v Noble, Clayton’s Case, 1816, Merivale’s Reports, Chancery, Vol 1, 572).

If the borrower does not make an allocation when making payment, the presentation by one party and acceptance by the other of the current accounting, as in a bank pass sheet,prevents the lender from making any later allocation. If, in such a situation, a dispute arises, treat each successive repayment as allocated against the oldest outstanding borrowing.