Income Tax Act 2007 section 742C

Value of benefit provided by a payment by way of loan

Section 742C sets out how to calculate the taxable benefit that arises when a person receives a payment by way of loan in the context of the transfer of assets abroad rules.

• The benefit is calculated for each tax year in which the loan remains outstanding
• The benefit equals the interest that would have been payable at the official rate, minus any interest the borrower actually paid
• If the borrower pays interest at or above the official rate, no benefit arises
• The official rate is the rate set under section 178 of the Finance Act 1989, the same rate used for employment-related loan benefits under ITEPA 2003