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
-
Mandatory payrolling of benefits in kind delayed
The government has revised plans to introduce the mandatory payrolling of benefits in kind from 6 April 2027, which will now be limited to company cars, vans, fuel and medical benefits. What's the full story?
-
Personal vs company donation to charity
You’re an owner manager and want to make a £5,000 donation to a local charity. You’ve claimed income tax relief under the gift aid scheme for smaller amounts but could it be more tax efficient to make the donation via the company?
-
Uber loses VAT margin scheme appeal
The Court of Appeal has ruled that Uber cannot use the Tour Operators Margin Scheme (TOMS) when accounting for VAT on its ride-hailing services. The decision could have significant implications for businesses that act as intermediaries when supplying services to consumers. What was the dispute about?