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Posted Mon, 22 Jan 2024 11:07:27 GMT by
Hi, I was posted to the UK 9 months ago as a representative of an overseas media company that is not based in the UK. I receive my salary from an overseas company. I would be grateful if you could advise me on the following issues: 1- I was given an interest-free loan of £40,000 to set up in the UK, which I have to repay in 3 years. Should I pay the task for this loan? 2- The loan and salary are received in different SWIFT transfers from different countries paid by the media clients. In fact, to optimize costs, they ask their clients to pay directly to my account. Is this salary payment will be a trouble for me?
Posted Thu, 25 Jan 2024 11:12:06 GMT by HMRC Admin 20
Hi RamUK Ba,
1. As the loan is over £10,000 this needs to be reported - Expenses and benefits: loans provided to employees  
2. No, but you will need to keep details of amounts in order to convert to sterling to declare in your return.
Thank you.
Posted Thu, 25 Jan 2024 19:21:15 GMT by
Hi HMRC Admin 20, Thank you for your note and response to my question. However, I am confused on a few points. It would be much appreciated if you could answer the following questions regarding the £40,000 overseas loan: 1- Should I pay tax on £40,000 or just the difference between the interest-free rate and HMRC's official rate of 2.25%? For example, in this case, will this difference tax be £900? But if you consider the whole amount of £40,000 as taxable income, it will be a very large amount of tax. 2- Should I pay the difference between interest-free and HMRC's official interest rate of 2.25% on the outstanding amount in each tax year over the three-year repayment period? 3- The overseas company deducts the repayment amount directly from my salary over the three year repayment period (i.e., my salary is £3500 per month but they deduct £1110 per month for the loan and only pay me £2390 per month). Should I pay tax on 2390 pounds or 3500 pounds as income?
Posted Tue, 30 Jan 2024 11:09:23 GMT by HMRC Admin 19

This is a beneficial loan, given at a preferential rate. Tax is payable on the interest that the loan would accrue, had it been charged, not the amount of the loan itself. The interest would only be chargeable in the tax years you were resident in the UK. The amount of loan exceeds the Self Assessment criteria, so needs to be reported in a tax return.

Thank you.

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