Finance Act 2017

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Amendment of section 122 of Principal Act (preferential loan arrangements)

74. Section 122 of the Principal Act is amended by substituting the following for subsection (2):

“(2) Where, for the whole or part of a year of assessment, there is outstanding, in relation to an individual, a preferential loan, the individual shall, subject to subsection (4), be treated for the purposes of section 112 or a charge to tax under Case III of Schedule D, as having received in that year of assessment, as a perquisite of the office or employment with the employer who made the loan, a sum equal to the difference between the aggregate amount of interest paid in that year and the amount of interest which would have been payable in that year, if interest had been payable on the loan at the specified rate and the individual or, in the case of an individual—

(a) who is a wife or husband whose spouse is chargeable to tax for the year of assessment in accordance with the provisions of Chapter 1 of Part 44, the spouse of the individual, or

(b) who is a civil partner whose civil partner is chargeable to tax for the year of assessment in accordance with the provisions of section 1031C, the civil partner of the individual,

shall be charged to tax accordingly.”.