Where an employer waives (in whole or in part) a loan to an employee and the waiver can be attributed to the fact that the borrower is an employee, the amount waived will usually be earnings of the employment ie it is 'money's worth' under ITEPA 2003, s 62 (see EIM21740), and is subject to Class 1 NIC at the time of the write off (see further details below). This is the case whether or not the loan is a taxable cheap loan as in E4.640. It applies to all employees; there was no exception for those in excluded employment before 2016/17 (see E4.601C).
Loans 'written off'—practical difference between tax and NIC treatment
HMRC expects loans written off to be reported on Section M of form P11D (see E4.11124). However the write off will attract Class 1 (payroll) NIC, rather than Class 1A1.
Examples of loan waivers and write offs for the purposes of the legislation
In Clayton v Gothorp2, an employee who attended a training course was granted a loan by
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