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    Beneficial Loans

    A director or employee obtains a benefit by reason of their employment when he or she, or any of their relatives, are provided with a cheap or interest free loan.

    These loans are called beneficial loans.

    An employee is chargeable to tax and the employer is liable for class 1A National Insurance on the difference between the official rate of interest and the interest, if any, paid.

    The benefit can be calculated using either the Normal Averaging Method or the Alternative Precise Method.

     


    Normal Averaging Method

    Loan at start of year + loan at end of year
    2
    x Months loan outstanding
    12
    x Official rate

    Alternative Precise Method

    Sum of: Loan outstanding on each day x Official rate on that day
    365

    HMRC Average Official Rates

    Use the table below to find the average official rate of interest for years when:

    Tax YearAverage
    Official Rate
    2019-20 announced at end
    of tax year
    2018-192.50%
    2017-182.50%
    2016-173.00%
    2015-163.00%
    2014-153.25%
    2013-144.00%
    2012-134.00%
    2011-124.00%
    2010-114.00%
    2009-104.75%
    2008-096.10%
    2007-086.25%
    2006-075.00%
    2005-065.00%
    2004-055.00%
    2003-045.00%
    2002-035.00%
    2001-025.94%
    2000-016.25%
    1999-20006.25%
    1998-997.16%
    1997-987.08%
    1996-976.93%

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    HMRC Actual Official Rates

    Use the table below in cases not within the above table.

    Tax YearActual
    Official Rate
    FromTo
    6th April 2017   2.50%
    6th April 20155th April 20173.00%
    6th April 20145th April 20153.25%
    6th April 20105th April 20144.00%
    1st March 20095th April 20104.75%
    6th April 200828th February 20096.25%
    6th April 20075th April 20086.25%
    6th January 20025th April 20075.00%
    6th January 20025th April 20035.00%
    6th March 19995th January 20026.25%
    6th August 19975th March 19997.25%
    6th August 19975th March 19997.25%
    6th November 19965th August 19976.75%
    6th June 19965th November 19967.00%
    6th February 19965th June 19967.25%
    6th October 19955th February 19967.75%
    6th November 19945th October 19958.00%

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    Click Here to download the current tax year's abacus Tax Tables pdf booklet

    Click Here to download the previous tax year's abacus Tax Tables pdf booklet

     

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