The Inland Revenue seems to be cracking down on everything at the moment. Payments of interest for late tax or national insurance contributions are the most recent to be revised.
With effect from 6 September this year the rate of interest paid on late tax or national insurance contributions will increase, generally by 1%.
Late payment interest for income tax, capital gains tax, stamp duty land tax, stamp duty reserve tax and national insurance contributions will rise from 6.5% to 7.5%. Late payment interest for inheritance tax, capital transfer tax and estate duty will also rise from 3% to 4%.
Our View
Whilst the only sensible advice we can give is to pay on time, the Inland Revenue has also increased the rates of interest paid out, generally where tax or national insurance contributions have been overpaid.
The new rate of interest for overpayments on tax and national insurance will be 3.5%, an increase of 1%. It seems a shame that the Inland Revenue could not bring itself to pay the full 7.5% interest that it will be claiming on late payments!
Knowing these figures, make sure you check the payments you make are not overpayments!