The Government has announced a reduction in the beneficial interest loan rate from 3.25% to 3% from April 6. 

This will impact on car dealers offering loans to employees in an employee car ownership arrangement.

"The drop in interest rate makes the use of an employee car ownership arrangement for demonstrator cars more viable," said Alastair Kendrick, employment tax director at MHA MacIntyre Hudson.

"These are largely used in the sector for some demo vehicles which are sold to employees to avoid the company car benefit in kind rules. 

"This announcement also may be used by those who have historical arrangements in place to see if what they are offering employees does take full advantage of current tax opportunities."