EIM26142 – The benefits code: beneficial loans: exemptions from charge: small loans: example

Section 180(1) ITEPA 2003

This example shows how the exemption for small loans (where the total balance on all loans does not exceed £5,000, see EIM26140) applies. An employee had three interest-free loans from his employer as follows:

Since the maximum total balance in the year is not more than £5,000 no tax is chargeable under Section 175(1) ITEPA 2003.

Note that if at some time in the year the balances were:

exemption under Section 180(1) ITEPA 2003 would not be due because the total balance has exceeded £5,000. See EIM26145 where the total balance exceeds £5,000, but the total of non- qualifying loans (see EIM26120) does not.