Home For AAT student members AQ 2016 Professional Diploma in Accounting Personal Tax

benefical loans

mikelevenemikelevene Registered Posts: 5
have a query wasn't totally sure on.
employer loaned employee say 30k, repays 15k, but the employer charges interest of say £200.
at the end of the year balance was £15200.
calculate assessable benefit using avarage method assuming loan provided at the start of the first day of the tax year.

as i understand it from the book, should be figure beginning of the tax year + figure at end of the tax year / 2 X 2.5%

30k + 15000 = 45000 / 2 X 2.5% = 562.50 assessable benefit, does the interest charge of £200 get added to the following tax year?

or is it the same above but including the extra £200 interest charge? see below

30k + 15200 = 45200 / 2 X 2.5% = 565


  • Duchess1Duchess1 MAAT Posts: 76
    if the employer charges 2% interest and the bank of England rate is 2.5% than the assessable benefit is (2.5% -.2%) * (30.000-15.000) = £75 which is a chargeable to income tax
  • mikelevenemikelevene Registered Posts: 5
    Ya that makes sence, but the way the question was written in the class the other day never said employers % just that they charged figure £X interest.

    so i'm assuming you do the normal avarage method without the interest figure employer charged.

    So 30k + 15k = 45k / 2 X 2.5% = 562.50

    Then you add in the interest charge % of there charge, to get total assessable benefit to the loan.
  • Duchess1Duchess1 MAAT Posts: 76
    That wouldn't work. The calculation you have made above would be based on the employer not charging any interest on the loan - so 562.20 would be the assessable benefit.

    in this case 562.20 - 200 (the amount of interest actually charged by the employer) = 362.20 would be the assessable benefit.

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