The UK’s Official Rate of Interest (ORI) is changing. Effective April 6, 2025, the ORI will increase from 2.25% to 3.75%. This follows the Chancellor’s Autumn Budget on October 30, 2024, where quarterly reviews of the ORI were announced, replacing the previous annual review system.
Why the change? To prevent employees from being overtaxed during potential interest rate drops.
What’s the ORI used for? HMRC uses the ORI to calculate the taxable value of:
- Employment-related beneficial loans
- Some employer-provided living accommodation
Key details:
- New Rate: 3.75% (up from 2.25%)
- Effective Date: April 6, 2025
- Legal Basis: Statutory Instrument 2025 No. 270, Taxes (Interest Rate) (Amendment) Regulations 2025
Need more info?
- Beneficial loan arrangements: HMRC official rates
- Employment Income Manual: EIM26104 The benefits code: beneficial loans: amount of the official rate
Stay on top of upcoming changing regulations. We simplify payroll compliance and save you time. Discover how automation can streamline your payroll processes.