Tax free employee loans. Could this tax break become a new form of payday loan?
We have recently published our advice update on loans to employees and directors which represents a great tax break given to employers to make loans to staff traditionally for things like train season tickets or even for a car.
Loans of up to £10,000 can be made interest free and there is no tax benefit charged to staff. There are conditions in particular that it is available to most staff. If you want to know more about this read the article loans to employees and directors or contact us for more information.
There is evidence in the US (www.deseretnews.com/article/865603533/Are-workplace-loans-the-new-payday-loans.html?pg=all) however that “workplace loans” as they call it are in cases disguised payday loans which can tie an employee to their employer. In these cases they are short term high interest loans arranged through third parties. Such an arrangement would not attract tax relief in the UK but there’s nothing to stop the third party funding the employer direct.
One to watch.