Employers who provide beneficial loans (such as low-interest or interest-free loans to cover the cost of season tickets for commuting) or access to living accommodation for their employees will be familiar with the calculations to work out the taxable value of the benefit in kind.

Each calculation for these benefits has its own complexities, but what they have in common is that employers need to use the HMRC Official Rate of Interest (ORI) as part of working out the benefit in kind value.

The ORI is published by HMRC and, since January 2000, HMRC have been restricted to one ORI applying throughout each tax year. This has helped keep the calculation of benefit in kind values for beneficial loans and living accommodation as straightforward as they reasonably can be.

Hidden in the small print of last year’s Budget was an announcement that from 6 April 2025, the ORI will be reviewed quarterly, and can be updated during the tax year where appropriate. Any mid-year increase or decrease in the rate will only apply from 6 July, 6 October or 6 January.

If the ORI changes during a tax year, employers providing beneficial loans or living accommodation to their staff will need to do separate benefit in kind calculations for each ORI period when they come to fill in forms P11D and P11D(b). For instance, if the ORI were to change with effect from 6 October 2025, an employer offering beneficial loans to staff would need to calculate the taxable benefit arising over the period 6 April to 5 October 2025 at one ORI, and combine this with the benefit calculated from 6 October 2025 to 5 April 2026 based on the new ORI.

The current ORI can be found on GOV.UK, and we expect updates to be published in the same place. Employers will need to keep an eye on that page when calculating benefit in kind values for employees with beneficial loans or employer-provided living accommodation – and may need to explain to employees why their benefits have changed from previous years.

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.  

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