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 拢10,000 (拢5,000 for 2013 to 2014 and earlier tax years), see EIM26140) applies. An employee had three interest free loans from his employer as follows:
| Purpose | Maximum balance outstanding |
|---|---|
| To pay for home improvements | 拢4,000 |
| To pay for a holiday | 拢4,000 |
| To buy his season ticket | 拢2,000 |
| Total | 拢10,000 |
Since the maximum total balance in the year is not more than 拢10,000 no tax is chargeable under section 175(1) ITEPA 2003.
Note that if at some time in the year the balances were:
| Purpose | Maximum balance outstanding |
|---|---|
| Home improvements loan | 拢4,100 |
| Holiday loan | 拢3,950 |
| Season ticket loan | 拢1,975 |
| Total | 拢10,025 |
exemption under section 180(1) ITEPA 2003 would not be due because the total balance has exceeded 拢10,000. See EIM26145 where the total balance exceeds 拢10,000, but the total of non-qualifying loans (see EIM26137) does not.