Identify the loan arrangement
A direct employer loan may qualify for non-taxable treatment when the scheme is available to all employees and the recipient has no substantial shareholding, control or influence. Employer-paid interest on a financial-institution loan is taxable. Director interest benefits are taxable, and any principal amount waived is taxable.
Use the correct period’s interest rate
From 1 April 2023, the benchmark is 1.5 percentage points above the published three-month compounded SORA. The source lists 3.0% for January–March 2026 and 2.6% for April–December 2026 and January–March 2027. The illustrated monthly calculation uses month-end outstanding principal multiplied by the annual rate and one-twelfth. Earlier years use the separately listed historical approach.
Official source
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