HMRC’s official rate of interest set to increase
HMRC’s official rate of interest will increase from 6 April 2025. What does it apply to, what is the new rate and what else is changing?

HMRC’s official rate of interest (ORI) will increase from 2.25% to 3.75% on 6 April 2025. This is the first increase to the ORI since 2023.
The ORI is used to calculate the taxable benefit in kind where an employee has a loan from their employer, or their employer provides them with living accommodation. There is no taxable benefit where the aggregate of all loans outstanding to an employee are less than £10,000 throughout the tax year. Above this amount, if a loan is provided to an employee interest free, or at a lower rate of interest than the ORI, the employee is taxed on the difference between the interest paid and the ORI. The situation can therefore be simplified by charging an employee at least the ORI on a loan. Employer provided living accommodation is perhaps less common, but the ORI is applied to the value of the property to determine the cash equivalent of the benefit.
From 6 April 2025, the ORI will be reviewed on a quarterly basis and updated if necessary to reflect changing interest rates.
Related Topics
-
How to pay a tax-efficient golden handshake
One of your firm’s directors is retiring soon and the board want to pay him a lump sum to reward his long service. The trouble is that golden handshakes are usually taxable. Is there a more tax-efficient alternative?
-
Permanent increase to penalty interest rates
The new tax year saw a change to the way interest on late paid taxes is calculated. What’s changed and what are the new charges?
-
HMRC pauses some refund claims for agents
Due to security concerns, HMRC has warned that it will not process refund claims made by authorised agents. What’s going on and what alternatives are available?