Income Tax (Earnings and Pensions) Act 2003 section 190

Exclusion of charge after death of employee

Section 190 provides a general exemption from the employment-related loan benefit charge when the employee who holds the loan dies.

• When an employee dies, any taxable cheap loan they held is treated as ceasing to be outstanding from the date of death
• For the purposes of calculating the benefit-in-kind using the normal averaging method, the loan is treated as having been discharged on the date of death
• No income tax charge arises on the beneficial interest rate advantage for any period after the employee's death
• If the loan is released or written off on or after the employee's death, the amount forgiven is not treated as taxable earnings