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HMRC internal manual

Employment Income Manual

Para 5: loan charge relevant step: rights to repayment of loan assigned to employee or employer

Schedule 11 F(No 2)A 2017

The loan charge is based on the amount of the loan which is outstanding at the relevant repayment date. One potential method of removing the loan charge would be for the loan to be outstanding to the employee or employer themselves. If the loan was owed to the employer, it could be said that the loan charge relevant step would not be taken by a relevant third person.

In order to avoid this Para 5 applies where:

  • a person has made a loan to relevant person on or after 6 April 1999 and
  • before the end of 5 April 2019, the employee or employer acquires a right to repayment of all or part of the loan.

The amount of the loan which becomes due to be repaid to the employee or employer is treated as an amount which is outstanding immediately before the end of 5 April 2019 and also as an amount of the loan for which P is treated as taking a relevant step.