CIOT: Help on small loans from employers a good move say tax campaigners
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 Low Incomes Tax Reform Group (LITRG).
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.”
Notes for editors
1. 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.
The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities. The CIOT’s 16,500 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.
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