EIM26146 - The benefits code: beneficial loans: exemptions from charge: small non-qualifying loans: example
Section 180(1)(b) ITEPA 2003
This example demonstrates the exemption of small non-qualifying loans (see EIM26145) when the total balances on all loans exceed 拢10,000 but the total balances on non-qualifying loans do not (拢5,000 for 2013/14 and earlier tax years).
An employee had three interest-free loans from her employer as follows:
| ### Purpose | ### Maximum balance outstanding |
|---|---|
| To buy a life annuity | 拢10,000 |
| To buy a boat | 拢3,000 |
| To buy a season ticket | 拢2,000 |
| Total | 拢15,000 |
Since the maximum total balance outstanding in the year exceeds 拢10,000, exemption under Section 180(1)(a) ITEPA 2003 is not due (see EIM26140).
However, the annuity loan is a qualifying loan and but for it the maximum total balance outstanding in the year would be 拢5,000. Since this total does not exceed 拢10,000, exemption under Section 180(1)(b) is due in respect of the non-qualifying loans (the boat and season ticket loans). The annuity loan will be charged as if it were the only beneficial loan.