Section 184 — Income Tax (Earnings and Pensions) Act 2003: Interest treated as paid

Interest treated as paid 184 1 This section applies where —

a the cash equivalent of the benefit of a taxable cheap loan is treated as earnings from an employee's employment for a tax year under section 175(1), or b the relevant amount in respect of the benefit of a taxable cheap loan is treated as earnings from an employee's employment for a tax year under section 175(1A).

2 The employee is to be treated for the purposes of the Tax Acts as having paid interest on the loan in that year equal to the cash equivalent.

3 But the employee is not to be treated as having paid that interest for the purposes of this Chapter or of any of the following Chapters of this Part— Chapter 3 (taxable benefits: expenses payments); Chapter 6 (taxable benefits: cars, vans and related benefits); Chapter 10 (taxable benefits: residual liability to charge).

4 The interest is to be treated—

a as accruing during the period in the tax year during which the employee holds the employment and the loan is outstanding, and b as paid by the employee at the end of the period.

5 The interest is not to be treated—

a as income of the person making the loan, or b as relevant loan interest to which section 369 of ICTA applies (mortgage interest payable under deduction of tax).