Employer Loans

alanthomaswatson

All


I am going to be buying my current company car from my employer. Obviously, I need to buy this from them. I propose to do this by way of an interest free loan from my employer.


In doing so, can they deduct the repayments at source (essentially reducing my income temporarily)? This would have the benefit of not having to pay tax on it and reducing my gross income below the £50,000 child benefit threshold.


Any help much appreciated


Thanks


Alan

rrobson

This would usually be a deduction from net salary, so you still have to pay tax and NI and it won't affect your benefit calculations.

I think perhaps you were thinking of a salary sacrifice scheme, which would reduce your actual salary, but these tend only to be available for things like childcare vouchers and pensions. I wouldn't think HMRC would be willing to accept one for a car purchase. Even season ticket loans don't work that way.

Also, there's a limit of £10k on an interest free loan from your employer before it starts becoming taxable as a benefit in kind, and it has to be paid off within 12 months.