How employee loans work
Some employers lend staff money for things like a rail season ticket, a bicycle or an emergency, often interest-free. Repayments are usually taken from your salary each month.
If you leave your job before the loan is repaid, the agreement usually says the balance is taken from your final pay or must be repaid.
Worked example
A £5,000 interest-free loan repaid over 12 months means £416.67 a month deducted from your pay, £5,000.00 in total.
Tax on cheap or interest-free loans
If the combined amount you owe on cheap or interest-free loans from your employer stays below £10,000 throughout the whole tax year, they're exempt from tax. Above that, the benefit may be taxable and your employer reports it to HMRC.
Inputs for the employee loan calculator
Amount to borrow
The amount your employer is lending you.
Interest rate (per year)
The rate in your agreement. Many employee loans are interest-free, so enter 0.
Term
How many months you'll repay over.
CALCULATOR QUESTIONS
Employee loan calculator questions
Are employee loans taxable?
Not if the combined amount you owe on cheap or interest-free employer loans stays below £10,000 throughout the whole tax year.
How are employee loans repaid?
Usually by monthly deductions from your salary.
What happens if I leave my job?
The outstanding balance is usually deducted from your final pay or must be repaid. Check your agreement.
What can I use an employee loan for?
Common uses are season tickets, bicycles and emergencies, depending on your employer.