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Official rate drops to 2.25%

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The official rate of interest applicable to employment-related ‘beneficial’ loans will decrease to 2.25% per annum with effect from 6 April 2020. The rate has stood at 2.5% since 6 April 2017.

Where an employer makes an interest-free or low-interest loan to an employee, a taxable benefit arises on the difference between any interest paid by the employee and the interest which would have been paid at the official rate of interest (if greater).

The change is made by the Taxes (Interest Rate) (Amendment) Regulations, SI 2020/194.

Issue: 1478
Categories: News