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 on a loan to buy an interest in a close company (see
IM3800 et seq).
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, Chapter 3C does not
create an annual charge, provided the employment continues.
If the employment terminates the annual charge is restored
There is still a potential charge under ITEPA03/S446U on
discharge of the notional loan whether or not ICTA88/S353 applies
(see
ERSM70140).
