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

Non-trading deficits on loan relationships

Non-trading deficits on loan relationshipsOverview of non-trading deficits (NTDs)When a company’s debits on its non-trading loan relationships and derivative contracts in an accounting period exceed the credits on its non-trading loan relationships and derivative contracts in the same period (the

14 Jul 2020 12:17 | Produced by Tolley Read more Read more

Subsistence expenses

Subsistence expensesIntroductionSubsistence is the amount incurred as a consequence of business travel. Typically it relates to accommodation and meal costs incurred. These amounts are allowed because they are associated with the necessary travel which is not to a permanent workplace. See the Travel

14 Jul 2020 13:43 | Produced by Tolley in association with Philip Rutherford Read more Read more

Enterprise management incentive schemes

Enterprise management incentive schemesWhat is an enterprise management incentive (EMI) scheme?The enterprise management incentive (EMI) scheme is a tax-advantaged share option employee incentive scheme aimed at small entrepreneurial companies that meet certain conditions. It is designed to assist

14 Jul 2020 11:36 | Produced by Tolley Read more Read more