Expenses and benefits: loans provided to employees

What's exempt

You might not have to report anything to HMRC or pay tax and National Insurance on some types of beneficial loans.

This includes loans you provide:

in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee)
with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year (£5,000 for 2013 to 2014)
to an employee for a fixed and invariable period, and at a fixed and invariable rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out
under identical terms and conditions to the general public as well (this mostly applies to commercial lenders)
that are ‘qualifying loans’, meaning all of the interest qualifies for tax relief - see the technical guidance for an explanation of this complex area
using a director’s loan account as long as it’s not overdrawn at any time during the tax year

You do have to report loans to your employees or their relatives if they’re made as part of a salary sacrifice arrangement.