Help on small loans from employers a good move say tax campaigners - LITRG Press Release
The Chancellor has announced an increase in an existing tax break which will be welcomed particularly by low-paid workers who receive short-term loans from their employers to tide them over, says the LITRG.
Employees generally have to pay tax on payments made or benefits provided to them by their employers, in cash or in kind. Where an employer makes a loan to an employee at a nil or reduced rate of interest, the employee is charged to tax on the ‘cash equivalent’ of the loan in excess of £5,000 in any tax year.
From April 2014, employers will be able to lend their employees up to £10,000 a year without a tax charge being incurred. At present the limit is £5,000.
Anthony Thomas, Chairman of LITRG said:
“Although the Chancellor suggested this move will particularly help with season ticket loans, the potential benefit is much wider. This is likely to be excellent news for employees who, particularly in these recessionary times, are occasionally in need of small loans from their employers to meet financial commitments up-front.
“It may certainly go some way to providing a more cost-effective and far less exploitative alternative to pay day loans.”
Contact: Robin Williamson (please use form at http://www.litrg.org.uk/ContactUs)