I have a client who owns 25% of the ordinary voting shares of a close company, but she is not a director or employee nor is she connected to a director or employee of the company. The company has lent her father £25,000 interest-free. As neither her father nor the client is an employee or connected to one, is there still a benefit in kind on the loan?

What is the charge?

Part 3, Chapter 7 ITEPA 2003 sets out the provisions that deal with taxable cheap loans to employees. In order for Chapter 7 to apply, the loan needs to be an ‘employment-related loan’ which is defined in section 174 ITEPA 2003. It requires that the loan is made to an employee or a relative of an employee (s174(1) ITEPA 2003).

A