tax on interest free loan from employer

meme_3

If the loan is greater than £5000, I understand that it will be taxed, but I can't find out how to calculate the tax liability.

Can anyone tell me if it is worth leaving my savings alone in my ISA and taking the tax hit, or is it better just to pay the capital amount upfront to keep the loan tax free?

It would be about £8000 total.

Thanks

Cardinal-Red

Your tax liability will be your marginal rate applied to the "benefit" of the loan - i.e. the interest due at the official rate (as prescribed by the treasury) less any amount you pay in interest... in this case £0 so it'll be the full interest at the official rate.

Not sure what you mean by "pay the capital amount upfront" though - what do you have on your mind?

Cardinal-Red

P.S. Sorry the official rate of interest at the minute is 6.25%