Beneficial loan calculator, 2026/27
If your company lends you money above the £10,000 de minimis at less than HMRC's official rate, a taxable benefit arises. Enter the loan balance and any interest you actually pay to see the benefit and the company's Class 1A National Insurance.
The beneficial loan calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.
If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. HMRC's official rate of interest for 2026/27 is 3.8%, applied on the average or actual balance method. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under business finance & profitability. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.
Last reviewed 12 September 2026 for the 2026/27 tax year. Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.
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Result, 2026/27
Taxable benefit in kind
Interest at HMRC's official rate
3.8%Interest you actually paid
Company Class 1A NIC on the benefit
Report on the P11D and P11D(b), payable by 22 July following the tax year.Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.
Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.
How this is calculated
A beneficial loan benefit arises when a director or employee borrows from their company at below HMRC's official rate of interest, currently 3.8% for 2026/27. The benefit is the interest that would have been due at the official rate, less any interest actually paid, applied pro rata for the number of months the loan was outstanding.
Loans that total £10,000 or less throughout the tax year are ignored entirely, so many small director's loan account overdrawn positions never trigger this charge even though they still need repaying to avoid the separate section 455 corporation tax charge.
The benefit is reported on form P11D, and the company pays Class 1A National Insurance on it at the standard employer rate by 22 July following the end of the tax year. The director also pays income tax on the benefit through their Self Assessment return or PAYE coding.
Average versus actual balance
HMRC normally lets you use the average balance method, taking the loan balance at the start and end of the tax year and halving it, which usually gives a lower benefit than tracking the exact daily balance. HMRC can require the more precise strict method if it produces a materially different, usually higher, result.
Where the loan is only outstanding for part of the year, whether taken out or repaid mid-year, the benefit is time-apportioned for the number of complete months it existed, which is what the month input in this calculator reflects.
Reducing or avoiding the charge
Charging interest at or above the official rate removes the benefit entirely, though that interest is then taxable income for the company. Repaying the loan before the tax year end, or keeping the balance under the de minimis threshold, are the simplest ways directors avoid the charge in practice.
This benefit is separate from the section 455 tax the company pays if the loan is still outstanding nine months and one day after the year end; both need considering together when a director's loan account runs overdrawn.
What this means for your company
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Frequently asked questions
What is HMRC's official rate of interest for 2026/27?
The official rate is 3.8% for 2026/27. It is set by HMRC and can be reviewed during the tax year, so check GOV.UK for any in-year changes before finalising a P11D.
Is there a threshold below which no benefit arises?
Yes. If the total outstanding balance of all loans to an employee or director never exceeds £10,000 at any point in the tax year, no beneficial loan benefit is charged at all.
Does the beneficial loan benefit replace the section 455 tax charge?
No, they are separate. The beneficial loan benefit is an income tax and NIC charge on the cheap interest. Section 455 is a corporation tax charge on the company if the loan is still outstanding nine months and one day after the year end.
Can I avoid the charge by charging myself interest?
Yes. If you pay interest to the company at or above the official rate, no taxable benefit arises. The interest received is then taxable income for the company, so there is no free lunch, but it avoids the personal benefit in kind charge.
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