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
-
Autumn Budget 2026 – what are the key tax announcements?
The Chancellor delivered the Autumn Budget on 28 October, announcing a mixture of tax increases, new reliefs and changes to the way tax is administered. Although the headline rates of income tax, National Insurance (NI) and VAT remain unchanged, there are some significant changes affecting business owners, landlords and private individuals. What are the main announcements?
-
Menopause and mental health support can be tax-free
Employers offering counselling and wellbeing services to staff have received clarification about which services can be provided tax-free. Updated guidance specifically includes menopause and mental health support, but not all employee assistance programmes will qualify. What should employers check?
-
Company owners' personal tax affairs under scrutiny
Company owners are being urged to check their personal tax affairs as a new compliance campaign focuses on transactions between limited companies and the people who control them. Loans, personal expenses and the use of company assets are among the areas attracting attention. Could you have overlooked a tax liability?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.