Section 399 Employment-related loans: interest treated as paid
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(1) This section applies if—
(a) an amount consisting of, or including, an amount representing the benefit of a loan (“a taxable amount”) counts as employment income of an individual in a tax year under section 394(1), or
(b) the [person who is (or any of the persons who are) the responsible person in relation to]1 a scheme is charged to tax on a taxable amount ...2 under section 394(2).
Amendments
1 Substituted for the words “administrator of” by Finance Act 2004 section 249(9) from 6 April 2006.
2 The words “under Case VI of Schedule D” omitted by Income Tax (Trading and Other Income) Act 2005 section 882(1) and Schedule 1 para 597 and repealed by Income Tax (Trading and Other Income) Act 2005 section 884 and Schedule 3 for 2005-06 and later tax years (for income tax purposes), and for accounting periods ending after 5 April 2005 (for corporation tax purposes).
(2) The individual or the [responsible person]1 is to be treated for all purposes of the Tax Acts (other than this Chapter) as having paid interest on the loan in the tax year equal to the amount representing the cash equivalent of the loan.
Amendments
1 Substituted for the word “administrator” by Finance Act 2004 section 249(10) from 6 April 2006.
(3) The interest is to be treated—
(a) as accruing during the period in the tax year during which the loan is outstanding, and
(b) as paid at the end of the period.
(4) The interest is not to be treated—
(a) as income of the person making the loan, or
(b) as relevant loan interest to which section 369 of ICTA applies (mortgage interest payable under deduction of tax).
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