Steve, thank you for your reply.
You have asked me for my opinion on whether interest free loan from an employee benefit trust is a chargeable benefit of not.
I must stress, this is my opinion and interpretation on beneficial loans..
There are general guidelines on beneficial loans definitions and/or restrictions.
There are exceptions when there is no benefit or reporting requirement and it would appear one of them is "the combined outstanding value of your loans to an employee is less than £5,000 throughout the whole tax year.
This exception would not apply as you have given me a figure of £500k.
More information on this can be found herehttp://www.hmrc.gov.uk/payerti/exb/a-z/l/loans.htm
I would like you to look at EIM26100 - the benefits code covering beneficial loans to employees and in particular to EIM26103 and EIM26110 herehttp://www.hmrc.gov.uk/manuals/eimanual/eim26100.htm
I share the opinion of your current accountant that this would be deemed a beneficial loan and subject to interest rate as applied by HMRC official rate guide herehttp://www.hmrc.gov.uk/manuals/eimanual/eim26104.htm
The tax payable on it would be the marginal rate applicable based on your total income in the relevant tax year.
I hope this is helpful and answers your question.
If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.