Tax free increase for employment-related loans

Tax free increase for employment-related loans

Where an employer provides an employee/director with a cheap or interest free loan they have to report notional interest (3.25% for 2014/15) on the loan on the form P11D. Where the balance of the loan is not more than a minimum level throughout the tax year no benefit is reportable.

The exemption applies if the total balance, at any point in the tax year, does not exceed a minimum limit and includes the total of low cost or interest free loans, or notional loans arising from the provision of employment-related securities.

From 6 April 2014 where the total outstanding balances on all such loans do not exceed £10,000 at any time in the tax year, there will not be a tax charge and employers will no longer be required to report the benefit to HMRC. Previously for 2013/14 the limit was £5,000.

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