Sarah Bradford explains the tax and National Insurance contributions charges that may apply in respect of employee loans.
There are various situations in which an employer may make a loan to an employee. For example:
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Where employees commute to work on public transport, an employer may offer employees a season ticket loan to enable them to cut their travelling costs by buying an annual season ticket.
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If the employer is a bank or a building society, employees may be able to benefit from a staff mortgage at a preferential rate.
Where an employee enjoys an interest-free loan or pays interest at a rate less than the official rate, unless the loan is an exempt loan, a tax charge will arise under the benefit-in-kind (BIK) rules.
Taxable cheap loans
A tax
