Para 3(1), (2) and (3): loan charge relevant step: meaning of outstanding loan
Schedule 11 F(No 2)A 2017
The amount of the relevant step taken on 5 April 2019 will depend on the outstanding balance of the loan on that date. It is therefore necessary to define the original amount lent and any repayments against that amount.
Para 3(1) states that an amount of a loan is outstanding if the relevant principal amount exceeds the repayment amount.
The relevant principal amount is defined in Para 3(2) as the initial principal amount lent as well as any other sums which have become principal under the loan. It excludes any sums which have been added under capitalisation of interest. This restricts the value of the loan to the initial amount plus any additional sums which have lent. Any additional interest which is charged on the loan will be excluded from the value of the loan.
It is then necessary to consider what repayments can be set against the relevant principal amount. Para 3(3) defines repayment amounts as the amount repaid against the principal before 17 March 2016. These repayments can be in money or other forms and can be paid by the employee or someone else. On or after this date, any payments against the principal amount can only be made in money and can only be made by the relevant person.
Certain payments are disregarded when considering the amount repaid against the principal under Para 4. Details of these are given in EIM47050.