Income Tax (Earnings and Pensions) Act 2003 section 174

Employment-related loans

Section 174 defines what counts as an employment-related loan for the purposes of the beneficial loan tax charge, covering who can make such a loan, who can receive one, and what exclusions apply.

• A loan is employment-related if it is made to an employee (or prospective employee) or their relative by the employer, a connected company or partnership, or a person with a material interest in a relevant close company
• The definition extends to anyone who takes over a loan from the original lender, or who arranges, guarantees or otherwise facilitates the continuation of an existing loan
• Two exclusions apply: loans made by an individual in the normal course of domestic, family or personal relationships, and loans to a relative of the employee where the employee derives no benefit
• Relatives are defined broadly to include spouses, civil partners, parents, children, remoter direct-line relations, siblings, and the spouses or civil partners of any of those people