Section 122 of the Principal Act is amended -

(a) in subsection (1) -

(i) by substituting the following for the definition of "employee":

"'employee', in relation to an employer, means an individual employed by the employer in an employment -

(a) to which Chapter 3 of this Part applies, or

(b) the profits or gains of which are chargeable to tax under Case III of Schedule D,

including, in a case where the employer is a body corporate, a director (within the meaning of that Chapter) of the body corporate;",

and

(ii) in the definition of "preferential loan" by substituting "means, in relation to an individual, a loan, in respect of which no interest is payable or interest is payable at a preferential rate, made directly or indirectly to the individual" for "means a loan, in respect of which no interest is payable or interest is payable at a preferential rate, made directly or indirectly to an individual",

and

(b) by substituting the following for subsection (2):