Section 174 — Income Tax (Earnings and Pensions) Act 2003: Employment-related loans

Employment-related loans 174 1 For the purposes of this Chapter an employment-related loan is a loan—

a made to an employee or a relative of an employee, and b of a class described in subsection (2).

2 For the purposes of this Chapter the classes of employment-related loan are— A A loan made by the employee’s employer. B A loan made by a company or partnership over which the employee’s employer had control. C A loan made by a company or partnership by which the employer (being a company or partnership) was controlled. D A loan made by a company or partnership which was controlled by a person by whom the employer (being a company or partnership) was controlled. E A loan made by a person having a material interest in—

a a close company which was the employer, had control over the employer or was controlled by the employer, or b a company or partnership controlling that close company.

3 In this section— “ employee ” includes a prospective employee, and “ employer ” includes a prospective employer.

4 References in this section to a loan being made by a person extend to a person who—

a assumes the rights and liabilities of the person who originally made the loan, or b arranges, guarantees or in any way facilitates the continuation of a loan already in existence.

5 A loan is not an employment-related loan if—

a it is made by an individual in the normal course of the individual’s domestic, family or personal relationships, or b it is made to a relative of the employee and the employee derives no benefit from it.

6 For the purposes of this section a person (“X”) is a relative of another (“Y”) if X is—

a Y’s spouse or civil partner , b a parent, child or remoter relation in the direct line either of Y or of Y’s spouse or civil partner , c a brother or sister of Y or of Y’s spouse or civil partner , or d the spouse or civil partner of a person falling within paragraph (b) or (c).