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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.

  • Go to ...
  • Normal Averaging method
  • Alternative Precise method
  • HMRC Average official rates
  • HMRC Actual official rates
  •  


    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 Year Average
    Official
    Rate
    2017-18  
    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%

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    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%

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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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