SE03122 - Removal or transfer costs: eligible expenses and benefits - bridging loans not provided by the employer - example

Paragraph 13 Schedule 11A ICTA 1988

Facts

The value of the old home at the time the new home is bought is £100,000. The new home costs £120,000 and the employee takes out a loan of that amount to complete the purchase. The employer reimburses the loan interest paid until the property is sold.

Comment

The loan does not meet condition (d) (see SE03121) and the eligible interest is restricted to 100/120 of the total interest paid.

If the employer decides to fund the mortgage interest on the employee's old home until it is sold, rather than funding a separate bridging loan, there will not be an eligible bridging loan, so the interest payments will not be an eligible expense.

Where the employer “makes” a cheap or interest-free loan (using the wide meaning in SE26110), so that, apart from the removals relief there would be a charge under Section 160 ICTA ( SE26101 onwards), see SE03123.