§ Dr. BrayTo ask the Chancellor of the Exchequer on what assumed rate of interest employees of banks and building societies who are in receipt of beneficial loans are currently paying tax on the difference between the rate of interest on beneficial loans and that rate; and what considerations are taken into account in deciding against which rate to assess this benefit.
256W
§ Mr. Maude[holding answer 6 March 1991]: The taxable benefit, if any, of a loan made by an employer to an employee is determined using the "official rate" of interest which is 14.5 per cent. from 6 March 1991. The statutory formula which governs the "official rate" of interest is contained in Treasury regulations and is, broadly, the average base rate of six named banks plus 1.5 per cent.