From April 2014, employers can help staff with tax-free loans of up to £10,000.
No taxable benefit-in-kind arises on interest-free loans where the total of all beneficial loans made to an employee does not exceed £10,000 at any time in the tax year.
Such loans can prove beneficial for example in assisting employees to purchase annual season tickets for travel to work.
If an employer gives the employee an interest-free loan, the rail ticket only costs the employee the amount borrowed and subsequently repaid. Providing the total of all beneficial loans made to the employee is less than £10,000, no taxable benefit arises, so the cost of the benefit is nil.
In addition, since the loan is not salary, the employer will not have to pay secondary Class 1 NICs on the amount borrowed.
In this way, interest free or cheap loans may be beneficial to both employers and employees.
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