Real interest rate meaning

The Chancellor of the Exchequer, Rachel Reeves, delivered the government’s Autumn Budget on 30 October 2024 Keenly awaited and watched, this was the first Budget from a Labour administration in fourteen years, and the first ever presented by a woman Chancellor. Many headline measures for Private Clients had been trailed in one form or another, and several of the changes—such as the Capital Gains Tax reforms—were not as draconian as many had feared, proving less severe than anticipated. It was definitely a Labour Budget, unmistakably Labour in flavour, with the Chancellor honouring election pledges not to raise income tax or National Insurance for ‘working people’, and instead securing the £40bn of tax rises by lifting employers’ National Insurance, narrowing the scope of IHT agricultural and business property reliefs, increasing CGT rates, reforming the taxation of carried interest, changing the rules for non‑UK domiciled individuals, bringing inherited pensions into the IHT net, confirming VAT on private school fees, increasing the SDLT surcharge for second homes, and even a hike in...

In this issue: Budgets and Finance Bills VAT Companies and corporation tax Real estate tax International Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Tax Highlights 2025/2026 Budgets and Finance Bills Second reading and committal of Finance Bill 2026 On 16 December 2025, Finance Bill 2026 (also referred to as Finance (No 2) Bill 2024–26) (FB 2026) had its second reading in the House of Commons. The House then resolved to split further consideration of FB 2026 between a Committee of the whole House and a Public Bill Committee. The Committee of the whole House will take the clauses and Schedules on the income tax charge and rates (clauses 1 to 8 and Schedules 1 and 2), agricultural property relief and business property relief (clause 62 and Schedule 12), inheritance tax on pension interests (clauses 63 to 68), gambling duties (clauses 83 to 85...

In this issue: Budgets and Finance Bills Finance International VAT Companies and corporation tax Employment taxes Real estate tax Taxes management and litigation Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Budgets and Finance Bills Publication of the National Insurance Contributions (Secondary Class 1 Contributions) Bill First read and published on 13 November 2024, the National Insurance Contributions (Secondary Class 1 Contributions) Bill would: amend the Social Security Contributions and Benefits Act 1992 to raise the secondary Class 1 NICs rate from 13.8% to 15% with effect from 6 April 2025 amend the Social Security (Contributions) Regulations 2001, SI 2001/1004, to reduce the secondary threshold for secondary Class 1 NICs and the prescribed equivalents of those thresholds for the 2025–26 tax year amend the National Insurance Contributions Act 2014 to increase the employment allowance to £10,500 and remove...

This Practice Note explores the principal legal terms typical of social housing finance and what distinguishes them from financing in other sectors. It focuses on standard financial covenants and other sector‑specific provisions, including events of default, together with terms linked to the availability of long‑term fixed rate interest options. For more on social housing finance transactions, see Practice Notes: Social housing entities entering into finance transactions Key deal structures in social housing finance Taking and enforcing security from social housing entities This Practice Note concentrates solely on private not‑for‑profit providers of social housing registered in England (referred to as ‘RPs’), as they comprise the vast majority of private debt finance raised by housing associations to date. It does not cover providers registered in Wales. Financial covenants—introduction The principal financial covenants in social housing finance are: loan to value gearing interest cover (less commonly) net rental income cover from charged properties Loan...

Loan Market Association investment grade facilities agreement This commentary draws on the Loan Market Association (LMA)’s recommended LMA Multicurrency Term and Revolving Facilities Agreement that incorporates Term SOFR (the LMA facilities agreement). The LMA provides various precedent loan agreements for investment‑grade deals, and single‑currency forms may suit a particular transaction better—the commentary can nonetheless be applied in that context. The provisions in the LMA facilities agreement, and in the LMA’s other precedent forms, are drafted on the basis of a series of assumptions. It is essential to recognise these, as amendments will usually be required where any assumption does not hold true. For further detail on those assumptions, see Practice Note: Loan Market Association investment grade documentation. That Practice Note also outlines the range of LMA‑recommended investment‑grade facility agreements and indicates the circumstances in which each is appropriate. In addition, the LMA publishes recommended form facility agreements for specialist transactions, including leveraged, real estate, trade and developing markets transactions. For more on these, please refer to our...

Banks and other financial institutions raise income by levying interest on the loans they extend. For lending to produce a return, the rate charged must at a minimum offset the lender’s own costs. See Practice Note: Introductory guide to interest in loan agreements—Cost of lending. In most syndicated facilities, many interest and interest period terms align with those used in real estate finance. This Practice Note highlights the interest and interest period mechanics that are particular to real estate finance (REF) deals. Where to start with drafting interest and interest period provisions in a real estate finance transaction These provisions for any given deal are ordinarily settled at term sheet stage before the facility agreement is drafted. It is therefore essential to review the term sheet’s terms before preparing the facility agreement. LMA real estate finance documentation The LMA includes clauses to address interest and interest period points within its real estate finance documentation, including its: single currency term facility agreement for real...

Definitions This Deed, between Lender and Borrower, defines key expressions used. Costs: all expenses on a full indemnity basis, including legal and professional fees. Event of Default: events in clauses 4.1.1–4.1.9. Financial Indebtedness: borrowing, bonds, finance leases, receivables financing, counter‑indemnities, and related guarantees. Insurance Policy: any current or future insurance benefiting the Borrower regarding the Real Property. Interest Rate: the stated annual rate or a closely comparable replacement if required. Legislation: UK laws and subordinate instruments, as amended, including approved codes of practice. Real Property: the assets in Schedule 1 together with buildings, fixtures and fixed plant. Receiver: any receiver (including a receiver and/or manager) appointed under this Deed or by law. Secured Obligations: all present and future liabilities to the Lender, including Costs and interest. Security Interest: any mortgage, charge, pledge, lien or similar arrangement conferring security. Security Period, VAT, Working Day: from today until full discharge; value added tax; any day except Saturday, Sunday...