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HMRC have announced that the official rate of interest used to calculate tax due on beneficial loans will be reduced from 1 March 2009. The official rate of interest must be set by Treasury regulations and where possible, changes are usually made from the start of a tax year, because this makes calculation easier. However, sometimes it is necessary to change the official rate during a tax year and when this happens the Treasury publishes an average official rate for the year which should be used where:
The normal averaging method is described in the HMRC Employment Income Manual at paragraph EIM26210. The official rate is currently 6.25 per cent and this is also the average rate. The official rate of interest will change to 4.75 per cent from 1 March 2009. For information on loans made in a currency outside the UK, see the HMRC Employment Income Manual at paragraph EIM26105. |
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About The Author  Sarah Laing Sarah is a Chartered Tax Adviser. She has been writing professionally since joining CCH Editions in 1998 as a Senior Technical Editor, contributing to a range of highly regarded publications including the British Tax Reporter, Taxes - The Weekly Tax News, the Red & Green legislation volumes, Hardman's, International Tax Agreements and many others. She became Publishing Manager for the tax and accounting portfolio in 2001 and later went on to help run CCH Seminars (including ABG Courses and Conferences). Sarah originally worked for the Inland Revenue in Newbury and Swindon Tax Offices, before moving out into practice in 1991. She has worked for both small and Big 5 firms. She now works as a freelance author providing technical writing services for the tax and accountancy profession. |
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Article Added Thursday, 22 January 2009 | 4778 Hits |
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