Tax - Benefits in kind - interest rate frozen

The income tax paid by an employee on a subsidised loan provided by an employer is based on the difference between the interest rate actually charged and what is known as the official rate of interest. At present the official rate is 5% and this will be frozen for the 2004-05 tax year, subject to review in the event of significant rate changes. Employees earning 8,500 a year or more (including the value of benefits) and directors are taxable on benefits received by reason of their employment. Employers are liable for Class 1A national insurance contributions.

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