Income Tax (Earnings and Pensions) Act 2003 section 288

Limited exemption of certain bridging loans connected with employment moves

Section 288 provides a limited income tax exemption for bridging loans that arise when an employee needs to move home for work purposes and incurs costs on the new residence before receiving the proceeds from selling the old one.

• A bridging loan qualifies as a "removal benefit" if it bridges the gap between buying a new home and selling the old one in connection with a job-related move, and is made before the limitation day
• The exemption only applies if there is unused removal benefit exemption — that is, the £8,000 statutory cap on removal expenses has not already been fully used up by other qualifying costs of the move
• The loan must be repaid within a calculated "exempted loan discharge period", determined by a formula based on the unused exemption amount, the maximum loan balance, and the official rate of interest at the time the loan is made
• References to the employee include members of their family or household, so a loan raised by or property interests held by family members also qualify, and tax for years ending before the limitation day may be assessed provisionally on the basis that the exemption will not be met