Expatriate Taxes
HMRC late payment interest rates increase – UK Tax
UK Tax. Corporation Tax. Interest and Penalties on late payments. Instalment Arrangements.
Today, HMRC announced an increase in its interest rates, due to another increase in the Bank of England base rate, from 4.25% to 4.5%. The new rates will take effect from Monday, 22nd May 2023, for quarterly tax instalment payments. The aim of the late payment rate is to encourage prompt tax payment by UK Taxpayers and to ensure the system is fair for those individuals who pay their liabilities within deadline.
The new rates will take effect from Wednesday, 31st May 2023, for non-quarterly instalments payments.
Today, HMRC has announced increases to interest charged on both the late payment of tax as well as on tax repayments/refunds.
The two new increased rates of interest are:
- Late Payment Interest which is set at base rate plus 2.5%. This will increase from 6.75% to 7% on 31st May 2023.
- Repayment Interest which is set at base rate minus 1% with a lower limit of 0.5% (known as the ‘minimum floor’). This will increase to from 3.25% to 3.5% from 31st May 2023.
IN SUMMARY:
The interest rate on unpaid instalments of Corporation Tax liabilities will increase to 5.5% from 22nd May 2023.
The interest rate for the late payment of other taxes will increase to 7% from 31st May 2023.
The interest rate paid by HMRC on the overpayment of tax will increase to 3.5% on 31st May 2023.
For further information, please click: HMRC late payment interest rates to be revised after Bank of England increases base rate – GOV.UK (www.gov.uk)
Please be aware that the information contained in this article is of a general nature. It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.