Income Tax (Earnings and Pensions) Act 2003 (c. 1)

Part 3 U.K. Employment income: earnings and benefits etc. treated as earnings

Chapter 7 U.K. Taxable benefits: loans

Modifications etc. (not altering text)

C1 Pt. 3 Ch. 7 extended (with modifications) (with effect in accordance with s. 97(3) of the amending Act) by Finance Act 2006 (c. 25), s. 97(1)(2)

Benefit of taxable cheap loan treated as earnings U.K.

178 Exception for loans where interest qualifies for tax relief U.K.

A loan is not a taxable cheap loan in relation to a particular tax year if, assuming interest is paid on the loan for that year (whether or not it is in fact paid), the whole of that interest—

(a) is eligible for relief under section 353 of ICTA [F1 or section 383 of ITA 2007 (relief for interest payments)],

(b) would be eligible for relief under [F2 section 353 of ICTA] but for the fact that it is a payment of relevant loan interest to which section 369 of ICTA applies (mortgage interest payable under deduction of tax),

(c) is deductible in computing the amount of the profits to be charged [F3 to tax] in respect of a trade, profession or vocation carried on [F4 wholly or partly in the United Kingdom] by the person to whom the loan is made, or

(d) is deductible in computing the amount of the profits to be charged [F5 to tax in respect of a UK property business [F6 (within the meaning of Chapter 2 of Part 3 of ITTOIA 2005 or Chapter 2 of Part 4 of CTA 2009)]] carried on by that person.

Textual Amendments

F1 Words in s. 178(a) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 431(a) (with Sch. 2)

F2 Words in s. 178(b) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 431(b) (with Sch. 2)

F3 Words in s. 178(c) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 587(a)(i) (with Sch. 2)

F4 Words in s. 178(c) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 587(a)(ii) (with Sch. 2)

F5 Words in s. 178(d) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 587(b) (with Sch. 2)

F6 Words in s. 178(d) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 550 (with Sch. 2 Pts. 1, 2)