Income Tax: Official Rate on Beneficial Loans to remain at 4%

HMRC`s official rate on beneficial loans will remain at 4% for the 2011-2012 tax year, subject to review if typical mortgage interest rates change markedly. This is relevant for employees or directors who have been, or will be, provided with a loan over £5,000 at a rate of interest below 4% that is not "qualifying" (e.g. used to buy an interest in a partnership or close company). It might also be relevant where nil paid or partly paid shares have been issued to an employee or director. The difference between the official rate and the actual interest payable on the loan (or zero, if the loan is made interest-free) is taxed as employment income.

Posted on: 14/02/2011

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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