Introduction to this document

Employee loan record

A taxable benefit may arise where a director or employee is provided with a loan, either interest free or at a favourable rate of interest. Use this document to calculate what, if anything, you need to declare to HMRC.

Important to monitor

Where a cheap-rate or interest-free loan is made to a P11D employee or director, a benefit in kind will have to be included if it’s more than £10,000 at any time during the year. You can use HMRC’s P11D working sheet to calculate the amount you need to include. However, it’s important to monitor loans to ensure that they don’t go over the limit, so complete a Employee Loan Record for all loans taken out by employees and directors.

Note. It is the combined outstanding value of all loans made to the director/employee throughout the year that must be less than £10,000 if a report to HMRC is to be avoided.