HMRC Increases Interest Charged on Late Tax Payments
Published / Last Updated on 15/05/2023
Apart from the fixed penalty fines for late filing of tax returns, HMRC has followed the Bank of England’s lead with recent interest rate increases by increasing the interest rates charged on late and outstanding taxes to be paid from 31 May:
|
Tax Type |
Interest Rate charged on Late Tax Payment Balances to 31 May 2023 |
Interest Rate charged on Late Tax Payment Balances from 1 June 2023 |
|
Income Tax due |
6.75% pa |
7.00% pa |
|
Capital Gains Tax due |
6.75% pa |
7.00% pa |
|
Value Added Tax due |
6.75% pa |
7.00% pa |
|
Annual Corporation Tax due |
6.75% pa |
7.00% pa |
|
Quarterly Corporation Tax due |
5.25% pa to 21 May 2023 |
5.50% pa from 22 May 2023 |
Overpaid? Interest Rate Paid on Tax Refunds
HMRC also confirmed that interest payable on refunds of taxes overpaid will be increased from 3.25% pa to 3.50% pa from 1 June 2023.
Comment
Despite government departments and regulators calling for restraint on interest rates charged by mortgage lenders and for banks and building societies to pass on increased interest rates to savers, it would appear not when it comes to government and HM’s own services, it is “one rule for them and one rule for us”.
HMRC’s current position on late payment interest charged and interest added on refunds stands at:
- Late payment interest on taxes due is set at Bank of England base rate plus 2.5% (4.5% pa base rate + 2.5% pa = 7.0% pa)
- Repayment interest, set at Bank of England base rate minus 1%, with a lower ‘minimum floor’ limit of 0.5% (4.5% pa base rate less 1.0% pa = 3.5% pa)