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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:
- The loan was outstanding throughout the income tax year
- You are using the normal averaging method calculation
- 2018-19 rate will be announced near the tax year end
| Tax Year | Average Official Rate |
|---|---|
| 2019-20 | announced at end of tax year |
| 2018-19 | 2.50% |
| 2017-18 | 2.50% |
| 2016-17 | 3.00% |
| 2015-16 | 3.00% |
| 2014-15 | 3.25% |
| 2013-14 | 4.00% |
| 2012-13 | 4.00% |
| 2011-12 | 4.00% |
| 2010-11 | 4.00% |
| 2009-10 | 4.75% |
| 2008-09 | 6.10% |
| 2007-08 | 6.25% |
| 2006-07 | 5.00% |
| 2005-06 | 5.00% |
| 2004-05 | 5.00% |
| 2003-04 | 5.00% |
| 2002-03 | 5.00% |
| 2001-02 | 5.94% |
| 2000-01 | 6.25% |
| 1999-2000 | 6.25% |
| 1998-99 | 7.16% |
| 1997-98 | 7.08% |
| 1996-97 | 6.93% |
HMRC Actual Official Rates
Use the table below in cases not within the above table.
| Tax Year | Actual Official Rate | |
|---|---|---|
| From | To | |
| 6th April 2017 | 2.50% | |
| 6th April 2015 | 5th April 2017 | 3.00% |
| 6th April 2014 | 5th April 2015 | 3.25% |
| 6th April 2010 | 5th April 2014 | 4.00% |
| 1st March 2009 | 5th April 2010 | 4.75% |
| 6th April 2008 | 28th February 2009 | 6.25% |
| 6th April 2007 | 5th April 2008 | 6.25% |
| 6th January 2002 | 5th April 2007 | 5.00% |
| 6th January 2002 | 5th April 2003 | 5.00% |
| 6th March 1999 | 5th January 2002 | 6.25% |
| 6th August 1997 | 5th March 1999 | 7.25% |
| 6th August 1997 | 5th March 1999 | 7.25% |
| 6th November 1996 | 5th August 1997 | 6.75% |
| 6th June 1996 | 5th November 1996 | 7.00% |
| 6th February 1996 | 5th June 1996 | 7.25% |
| 6th October 1995 | 5th February 1996 | 7.75% |
| 6th November 1994 | 5th October 1995 | 8.00% |
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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