The Association of Taxation Technicians (ATT) has welcomed the doubling of the employer-loan limit from April 2014, and suggested the change should come in even sooner.
Yvette Nunn, President of the ATT said:
“The doubling of the exemption limit for beneficial loans from £5,000 to £10,000 will be welcomed by employees. It will also reduce a reporting burden for many employers. But why cannot such a simple change be introduced from April 2013 now that the need has been identified?
“This is one of the numerous situations where the effectiveness of a tax exemption has been eroded over time by inflation. We have had the £5,000 limit for nearly 20 years. A more common example is the failure of approved mileage rates to keep up with forecourt pump prices and other motoring costs. It would be so much simpler if there was an automatic adjusting mechanism to maintain the value of all exemptions and reliefs. Perhaps the classic is that for many purposes tax legislation still thinks that a higher paid employee is someone earning over £8,500 a year (yes, that was eight thousand five hundred pounds).”
Notes to Editors
- Employees who receive interest-free loans from their employer have to pay income tax on that benefit. They are treated as receiving additional income, currently calculated at 4% of the loan but a loan not exceeding £5,000 is exempt from the provision. The Budget announcement doubles that limit but only from April 2014, which is the 20th anniversary of the introduction of the £5,000 limit.