Taxes Consolidation Act 1997 section 122

Preferential loan arrangements

Section 122 imposes a benefit in kind (BIK) charge where an employee receives a preferential loan from his or her employer.

• A preferential loan is one where interest is either not paid or is paid at a rate below the specified rate — 4% for home loans and 13.5% for all other loans
• The BIK is the difference between the interest actually paid and the interest that would have been payable at the specified rate, and is treated as a taxable perquisite of the employment
• If an employer writes off or releases all or part of a loan or interest on a loan, the amount written off is taxable as an employment perquisite in the year it occurs
• Loans made by an individual employer in the normal course of domestic, family or personal relationships are excluded from the charge