Is an employer allowed to lend money to an employee?

Question

I'm waiting for a mortgage to come through and will need a couple more days to get the money. I am willing to pay a couple of days interest at official rates but just wondered if it was something that was legally allowed in the UK.

Answer 1

yeah it is allowed. although if you get a special rate of interest i.e. below 5%, you would strictly speaking have to declare it on a form P11d. your employer should be able to explain it in more depth.

Answer 2

There is nothing to stop anyone lending anyone else money - although the lender would want to put tight controls in place to make sure he was repaid.
As an employer, I would want a watertight agreement for the money to be repaid - something which it would possibly take too long to draw up if the money is needed urgently. An alternative might be an advance of salary for this month.

Answer 3

Well, who is the employer and who is the employee.
As you mention the official rate, I assume you are a Director of the company, since this is the rate which is deemed to be charged even if you pay a lower rate.
Yes, it is legal, but there are tax consequences if it's a close company loan to director.

Answer 4

Am not too sure about laws in UK..but I think you could surely ask your employer for a pay advance to help you out. You could ask for a couple of months' salary in advance to help you out. Alternatelyyour employer could lend you money in his personal capacity-not professionally.

Answer 5

I did this with a previous employer with no bother. I just signed to say that he could deduct a certain amount each month from my salary, and he did not charge interest.

Answer 6

It depends upon your relations with the employer, your behaviour, your relaiability and the policy of the employer.

Answer 7

yes

Answer 8

Why not ask him. If he likes and respects you...I'm sure he will help you.