HMRC internal manual

Employment Income Manual

EIM26280 - The benefits code: beneficial loans: apportionment of cash equivalent of joint and several loan to two or more chargeable employees

Section 185 ITEPA 2003A loan may sometimes be made joint and severally to two or more employees who are chargeable under Section 175(1) ITEPA 2003 (see

EIM26102) in respect of the loan. Examples include mortgage loans to a couple who are both employees of the lender and loans to a partnership of which the partners are employees of the lender.

A joint and several loan is advanced in its full amount to each of the borrowers severally. When calculating the cash equivalent of such a loan, where the joint borrowers are employees within Section 175(1), apportion the cash equivalent of the whole loan between each chargeable employee on a just and reasonable basis according to the facts of the case.

Do not:
* apportion any part of the cash equivalent to a joint borrower who is not chargeable to tax under Section 175(1) in respect of the loan, or * apportion the loan itself to treat each borrower as borrowing part of the loan. This means that for the purpose of the exemptions for small loans (see EIM26140) and small non- qualifying loans (see EIM26145), the full amount of the joint and several loan must be considered for each employee.Each employee chargeable under Section 175(1) must elect for the precise method of calculating the cash equivalent (see

EIM26230) of a joint and several loan, for such an election to be effective.