Beneficial Loan Arrangements
Specific legislation was introduced, with effect from 6 April 1978, to tax the benefit arising if loans are provided by an employer to an employee at a nil or low rate of interest. This applies to directors or higher-paid employees only and employees earning less than £8500 can take advantage of a beneficial loan arrangement without any tax liability arising, provided certain simple rules are followed. There must be no contractual entitlement to the provision of a loan, once granted it must not be transferable or assignable and it should not be ‘exchangeable’ for increased emoluments at the employee’s option.
KeywordsFringe Benefit Official Rate Fixed Term Specific Legislation Lineal Descendant
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