EIM03121 - Removal or transfer costs: expenses
and benefits to which Section 271 ITEPA 2003 applies: bridging
loans: loans not provided by the employer
Section 284 ITEPA 2003
Reimbursed bridging loan interest is eligible for exemption
where:
- the employee, or
- the employee and one or more members of
his or her family or household (see
EIM20504), or
- one or more members of the employee's
family or household
- disposes of an interest in the old home and
acquires an interest in the new home and
- has to take out a loan to bridge the gap
between the date when the interest in the new property is acquired
and the date when the sale proceeds of the old property are
available and
- uses the loan only to redeem loans relating
to the old home or to acquire the new home. A loan relates to the
old home if it was raised to acquire the property, for example a
mortgage, or if it was secured on the property, for example a home
improvement loan, and
- the loan does not exceed the market value
of the old home at the time the new home is acquired.
Where the bridging loan is not provided or facilitated by the
employer and the conditions at (a), (b), (c) and (d) above are
satisfied, the interest on the loan is an eligible expense. If
either or both of the conditions at (c) and (d) are not met the
eligible interest is restricted. The eligible amount is the
interest payable on the proportion of the loan that meets both
conditions.
For further guidance see the example at
EIM03122.
