Employer loan

M635

Hi,


I took a 0% loan from my employer for £5000, running since last July paying back at around £140 a month.


They have offered to write the loan off so it would no longer be owing to them, however I'm sure I then have to pay tax or NI from my wages the month they write it off ?


I've done a bit of googling and its seems I might have to pay Class 1 NICs on the original amount and not full PAYE, does anyone know how I work out my take home wage for the month the loan will be written off ?


Or have I got this all wrong and I don't pay tax/NI if they write my loan off ?


Any help appreciated.


Thanks

redpete

Seems odd that they are effectively giving you some money and you won't have to pay tax on it, but I don't know details to confirm either way.

Clive_Woody

Not quite the same but I got a sign on bonus of a similar size for my current role and I had to pay tax and NI. I would effectively say this would be considered a bonus of sorts which are normally eligible for tax and NI.

M635

Thanks for the replies, but employee/employer 0% loans are different as 5k and under you don't pay tax if you're paying it back, but if its then written off the HMRC website seems to imply I pay NI based on original amount but can't locate any definitive info on the amount

Glennn

Don't quote me on this but would the balance be a taxable benefit?

Easiest thing to so would be ring the tax office?

PeacefulWaters

Glennn wrote: »

Don't quote me on this but would the balance be a taxable benefit?

Easiest thing to so would be ring the tax office?

But don't tell them who you are or who your employer is!

Suzy_P

As they are writing it off, you are due to pay NI and/or tax on the balance. If you can't find the details of how much or when/how you pay on the HMRC website, ring the helpline, but they will need your details.

imoneyop

I believe (and I may be wrong ) that the written off loan will be treated as a benefit in kind and your employer will have to report it on a P11D at the end of the tax year.

There is no way it won't be taxable, as otherwise every employee would be getting given large loand that the employer would then write off.

redpete

M635 wrote: »

Thanks for the replies, but employee/employer 0% loans are different as 5k and under you don't pay tax if you're paying it back,

That bit is understandable

but if its then written off the HMRC website seems to imply I pay NI based on original amount but can't locate any definitive info on the amount

But in this case they are now giving you the money - so why should it be free of tax and NI and not treated like any pother part of your normal income?

purdyoaten

Some confusion here. imoneyop is correct.

If the loan balance does not exceed £5000 in the year, any benefit in kind as a result of a low or Nil interest rate being charged is not reportable.

If the loan is written off, however, this is reportable on a P11D.

Different rules apply to a) the interest charged and b) the loan itself.

http://www.hmrc.gov.uk/payerti/exb/a-z/l/loans.htm

M635

Thanks for the all the replies I think I'll just call them.




Also just to clear it up I'm not trying to avoid NI/Tax.


Trying to work out how much my wages will be short the month its written down as I'm presuming its going to be quite a hefty % taken from my standard monthly salary, so if I take the offer I need to make sure I'm covered for my normal outgoings if I'm say £400 short for the month.