EIM03122 - Removal or transfer costs: expenses and benefits to which Section 271 ITEPA 2003 applies: bridging loans not provided by the employer: example
Section 284 ITEPA 2003
Facts
»Ê¹ÚÌåÓýapp value of the old home at the time the new home is bought is £100,000. »Ê¹ÚÌåÓýapp new home costs £120,000 and the employee takes out a loan of that amount to complete the purchase.»Ê¹ÚÌåÓýapp employer reimburses the loan interest paid until the property is sold.
Comment
»Ê¹ÚÌåÓýapp loan does not meet condition (d) in EIM03121 and the eligible interest is restricted to 100/120 of the total interest paid.
If the employer decides to fund the mortgage interest on the employee’s old home until it is sold, rather than funding a separate bridging loan, there will not be an eligible bridging loan, so the interest payments will not be an eligible expense.
Where the employer makes a cheap or interest-free loan (using the wide meaning in EIM26110), so that, apart from the removals relief there would be a charge under Part 3 Chapter 7 ITEPA 2003 (see EIM26101 onwards),see EIM03123.