Income Tax (Earnings and Pensions) Act 2003 section 185

Apportionment of cash equivalent in case of joint loan etc.

Section 185 deals with the apportionment of the taxable benefit of a cheap or interest-free loan where two or more employees are jointly liable or otherwise share the same loan in a tax year.

• Where the same taxable cheap loan gives rise to a benefit charge for two or more employees, the cash equivalent must be shared between them
• The apportionment must be carried out on a just and reasonable basis
• Each employee is taxed only on the portion of the cash equivalent allocated to them
• The allocated portion is treated as the full cash equivalent of the loan benefit so far as that particular employee is concerned