Income Tax (Earnings and Pensions) Act 2003 section 25-27

Taxable benefits: loans [ITEPA 2003 Sch 7 paras 25-27]

Sections 25 to 27 of Schedule 7 set out transitional rules for the taxation of employment-related loans, covering how the benefit-in-kind charge applies to loans made before key historic dates and how certain calculations and definitions are modified for older loans.

• The taxable benefit rules for employment-related loans apply to all loans regardless of when they were made, including those made before 29th July 1976, but the write-off charge does not apply where arrangements were made to protect pre-6th April 1976 shares from falling in value
• For loans made before 6th April 2003, when using the alternative method of calculating the interest benefit under section 183, the calculation must use 365 days rather than the actual number of days in the tax year
• Where a loan made before 6th April 2003 is released or written off, the amount is treated as earnings under section 188, but with modifications to reflect the older legislative framework that applied before that date
• References to employment in connection with pre-6th April 2003 loans are read as references to the earlier definition of employment-related loans, and older statutory wording from ICTA relating to lower-paid employments and ministers of religion is substituted for the current terminology

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