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The Taxes (Interest Rate) (Amendment) Regulations 2025

S.I. 2025/270 · Made 5 March 2025

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Income Tax

Made 5th March 2025

Laid before the House of Commons 6th March 2025

Coming into force 6th April 2025

The Treasury make the following Regulations in exercise of the powers conferred by section 178(1) and (2)(s) of the Finance Act 1989f1.

Annotations to the whole text

Footnotes

f1

1989 c. 26; paragraph (s) of section 178(2) was inserted by paragraphs 156 and 162(d) of Schedule 6 to the Income Tax (Earnings and Pensions) Act 2003 (c. 1).

Contents

  1. 1Citation and commencement
  2. 2Amendment of the Taxes (Interest Rate) Regulations 1989
  3. Signature
  4. Explanatory note

1Citation and commencement

These Regulations may be cited as the Taxes (Interest Rate) (Amendment) Regulations 2025 and come into force on 6th April 2025.

2Amendment of the Taxes (Interest Rate) Regulations 1989

In regulation 5(1) of the Taxes (Interest Rate) Regulations 1989f1, for “on and after 6th April 2023, be 2.25 per cent per annum” substitute “on and after 6th April 2025, be 3.75 per cent per annum.”.

Signature

Jeff Smith

Vicky Foxcroft

Two of the Lords Commissioners of His Majesty’s Treasury

5th March 2025

Explanatory note

(This note is not part of the Regulations)

These Regulations amend the Taxes (Interest Rate) Regulations 1989 (“the 1989 Regulations”).

The 1989 Regulations set the official rate of interest for the purposes of Chapter 7 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”). Chapter 7 provides that tax is chargeable on an employment-related loan to the extent that the interest rate that it carries is lower than the official rate of interest. Calculation of the cash equivalent of the benefit of the loan for any tax year, which is generally the amount of the benefit that will be treated as earnings from the employment, is the difference between the amount of interest on the loan at the official rate and the amount of interest paid on the loan for that year. Section 181 of ITEPA, in effect, defines “the official rate of interest” as the rate prescribed in regulation 5 of the 1989 Regulations.

Regulation 2 increases the generally applicable official rate of interest from 2.25 per cent to 3.75 per cent per annum with effect from 6th April 2025. It does not affect the modified official rates that apply in relation to Japan and Switzerland, which are prescribed in regulation 5(2) of the 1989 Regulations.

A Tax Information and Impact Note has not been prepared for this instrument as it contains no substantive changes to tax policy.