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?
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Free childcare for company owners?
You’re an owner manager and your daughter is due to start nursery. You understand that working parents can get free childcare but a friend said this isn’t available if you only pay yourself dividends. Is this true and what can you do to qualify?
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CT61
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Getting the NI on benefits right
Getting the National Insurance (NI) treatment of employee benefits wrong remains a common issue for employers, particularly where the benefits are payrolled. Errors can lead to underpaid NI and potential compliance action. What should you check?
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.
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