2008/09 Average official interest rate?

2008/09 Average official interest rate?

Didn't find your answer?

On 9 February Accountingweb published a news article concerning the reduction in the official rate of interest to 4.75%. That article refers to the interest rate applying to the calculation of the benefit charge on a loan from an employer at 6.25% where the interest is calculated on the averaging basis. However, I have just noticed on HMRC's helpsheet it states that the average official rate is 6.10%.

So which is correct?
Paula Sparrow

Replies (3)

Please login or register to join the discussion.

avatar
By AnonymousUser
19th Mar 2009 11:51

Looks like article is incorrect
Section 182 ITEPA 2003 (Step 2) states how to calculate the average rate when it changes during the year. Whoever wrote the article would be the only person who could explain the statement but the legislation is quite clear. The statutory instrument (SI 2009/199) makes no reference to the average rate and neither does the explanatory note. The explanatory leaflet on HMRC website at www.hmrc.gov.uk/si/2009-0199-em.pdf. (which I haven't read but may help)

Thanks (0)
avatar
By Paula Sparrow
18th Mar 2009 18:11

So the statement in the Accountingweb News article was wrong?
The penultimate paragraph in the News article seems to be categoric.
https://www.accountingweb.co.uk/cgi-bin/item.cgi?id=194483&d=1025&h=1019&f=1026&dateformat=%25o%20%25B%20%25Y

I can't find any statements from HMRC at about that time which would have been the basis for that article, so I was just wondering where that particular statement originated from. Have HMRC changed their position?

Thanks (0)
avatar
By AnonymousUser
18th Mar 2009 15:56

6.1% is correct
Both the rates quoted (6.24% and 4.75%) are annual rates. As the rate changed with 36 days of the tax year remaining the average rate over the full year comes out at 6.1%.

Thanks (0)