Loans provided to employees

Produced by a Tolley Employment Tax expert
Employment Tax
Guidance

Loans provided to employees

Produced by a Tolley Employment Tax expert
Employment Tax
Guidance
imgtext

Employers sometimes provide their employees with loans, sometimes charging interest and often not, either as part of the reward package or to help the individual meet significant expenditure. For example, it is common to provide loans for the purchase of annual travel passes.

As with any other kind of employment reward, if the loan is provided by a third party rather than the employer, it is worth considering whether the disguised remuneration provisions apply, as those rules have priority over most of the other rules for taxing employment income. The rules are discussed in detail in the Disguised remuneration ― overview guidance note.

When an employer lends money to an employee at an interest rate lower than the official rate of interest (ORI) set by HMRC, the difference between the amount of interest actually charged (if any) and the ORI is a taxable benefit.

To be a benefit, the loan must be provided ‘by reason of employment’. A benefit provided to an employee’s relative is chargeable on the employee (unless that relative is also an employee,

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+
  • 08 Dec 2025 09:40

Popular Articles

Simple assessments

Simple assessmentsFrom 2016/17 onwards, HMRC has the power to make a ‘simple assessment’ of the taxpayer’s income tax and / or capital gains tax liability outside of the self assessment system. As HMRC already receives significant amounts of information on the income received and tax paid by

14 Jul 2020 13:40 | Produced by Tolley Read more Read more

Gifts with reservation ― overview

Gifts with reservation ― overviewIntroductionA gift with reservation (GWR) arises when an individual ostensibly makes a gift of his property to another person but retains for himself some or all of the benefit of owning the property. The legislation defines a gift with reservation with reference to

14 Jul 2020 11:48 | Produced by Tolley Read more Read more

Indexation allowance and rebasing

Indexation allowance and rebasingThis guidance note explains the general rules surrounding the availability of indexation allowance (which was frozen at December 2017) on the disposal of company assets and provides information on the rebasing rules for assets held on 31 March 1982. For an overview

14 Jul 2020 11:59 | Produced by Tolley Read more Read more