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HMRC internal manual

Employment Related Securities Manual

HM Revenue & Customs
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Securities acquired for less than market value: relief for acquisition of shares in close company

ITEPA03/S178 removes the annual charge on beneficial loans where, if real interest were being paid on a real loan to acquire the shares, tax relief on the real interest would be allowed under ICTA88/S353 or ITA07/S392.

ITEPA03/S446S (3) says that this rule will also apply in the case of notional loans arising under Chapter 3C. Therefore, if the notional loan is linked to shares in a close company for which interest relief would be due under ICTA88/S353 or ITA07/S392, Chapter 3C does not create an annual charge.

There is still a potential charge under ITEPA03/S446U on discharge of the notional loan whether or not ICTA88/S353 or ITA07/S392 apply (see ERSM70140).