Great question — and you've put your finger on two completely separate charges, so let's untangle them.
1. The benefit-in-kind charge (the "official rate" bit)
When a company lends a director money interest-free, HMRC treats the interest you've saved as a taxable benefit. The cash equivalent is the average loan balance over the tax year multiplied by HMRC's official rate of interest, minus any interest you actually paid. So your instinct is right: the charge is the gap between the official rate and what you pay, applied over the period the loan is outstanding. For 2025/26 the official rate is 3.75% (it was 2.25% for 2023/24 and 2024/25).
Who pays? You do, through your Self Assessment return at your marginal Income Tax rate — and the company reports the benefit on a P11D and pays employer's National Insurance on it.
2. The good news for your £8,000 loan
Loans with a combined outstanding balance below £10,000 for the whole tax year are exempt from the benefit-in-kind charge entirely. Since your loan peaked at £8,000, there should be no benefit charge and nothing to report — just make sure the balance never creeps over £10,000 at any point in the year.
3. The 33.75% charge is something separate
Section 455 tax is charged on the company, not on you: if the director's loan is still outstanding 9 months after the end of the corporation tax accounting period, the company pays Corporation Tax at 33.75% of the outstanding balance (32.5% for loans made before 6 April 2022), reported on the CT600A supplementary pages. It isn't a permanent cost — the company can reclaim it once the loan is repaid, but HMRC won't repay before 9 months and a day after the end of the accounting period in which the repayment happened, and the claim must be made within 4 years.
Practical tip: keep repaying steadily, and beware the "bed and breakfasting" rules — repaying a loan of more than £5,000 only to take another loan of £5,000 or more within 30 days either side doesn't clear the section 455 charge. With your loan being repaid monthly and staying under the £10,000 benefit threshold, you're handling it sensibly.
