HMRC’s official rate of interest set to increase
HMRC’s official rate of interest will increase from 6 April 2025. What does it apply to, what is the new rate and what else is changing?
HMRC’s official rate of interest (ORI) will increase from 2.25% to 3.75% on 6 April 2025. This is the first increase to the ORI since 2023.
The ORI is used to calculate the taxable benefit in kind where an employee has a loan from their employer, or their employer provides them with living accommodation. There is no taxable benefit where the aggregate of all loans outstanding to an employee are less than £10,000 throughout the tax year. Above this amount, if a loan is provided to an employee interest free, or at a lower rate of interest than the ORI, the employee is taxed on the difference between the interest paid and the ORI. The situation can therefore be simplified by charging an employee at least the ORI on a loan. Employer provided living accommodation is perhaps less common, but the ORI is applied to the value of the property to determine the cash equivalent of the benefit.
From 6 April 2025, the ORI will be reviewed on a quarterly basis and updated if necessary to reflect changing interest rates.
Related Topics
-
Should you voluntarily payroll benefits in kind?
The window to sign up to voluntarily payroll non-mandatory benefits in kind for 2027/28 will open in November. Is it worth volunteering to pay HMRC earlier than required or should you wait until it becomes mandatory in 2028/29?
-
Wise tax statement errors could affect 4,000 customers
Around 4,000 UK customers of financial services provider Wise have been told that tax statements issued between 2021 and 2025 contained incorrect figures. The errors could have resulted in taxpayers paying too much or too little income tax and capital gains tax (CGT). What should affected customers check?
-
CT61