The Official Rate of Interest (ORI) is used to calculate the Income Tax charge on employment-related loans and certain taxable benefits related to living accommodation.
At the Autumn Budget 2024, the government announced that the previous commitment (made in January 2000) to keep the ORI unchanged during the tax year will no longer apply. From 6 April 2025, the ORI may increase, decrease, or remain the same throughout the year.
The rate will continue to be reviewed quarterly, with any changes taking effect on 6 April, 6 July, 6 October, and 6 January. Updates will be published online at Beneficial Loan Arrangements — HMRC Official Rates.
This change ensures greater fairness in the tax system by allowing the ORI to adjust in-year as needed, ensuring employment-related loans and living accommodations are accurately valued. It will also support employers using payrolling benefits, allowing them to reflect changes in taxable benefits more accurately and reduce the need for end-of-year adjustments. This will help simplify reporting and improve tax compliance.
For more details, refer to Autumn Budget 2024 — Overview of Tax Legislation and Rates (OOTLAR).
Impact on Employers
If you provide employment-related loans or living accommodation, stay informed about potential ORI changes. From 6 April 2025, in-year rate increases may affect the taxable value of these benefits. Employers using payrolling will benefit from the ability to apply real-time adjustments, reducing administrative burdens and improving accuracy in tax calculations
