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HMRC internal manual

Employment Income Manual

Para 22: loan charge relevant step: commercial terms condition

Schedule 11 F(No 2)A 2017

A loan will meet the commercial terms condition if:

  • it is reasonable to assume that such a loans would have been available on comparable terms from the lender to members of the public or
  • the loan was made in the ordinary course of a lending business

The borrower also needs to have complied in all material respects with the terms of the loan.

In order to decide whether a loan is made in the ordinary course of a lending business, that business has to include the lending of money or the supply of goods or services on credit.