HMRC interest rates are linked to the Bank of England base rate. Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.
The latest increased the Bank of England base rate from 4.5% to 5% means that interest on late paid tax will increase to 7.5% for most taxes and the rate of repayment interest will increase to 4% if you overpay.
These changes came into effect on 11 July 2023.
For those companies required to pay their corporation tax by quarterly instalment payments the rate increased to 6% from 3 July 2023.
If you are late with your self-assessment payment on account for 2022/23 that was due on 31 July 2023 then you should pay as soon as possible to avoid incurring further interest charges. Note that there is a 5% surcharge added to any tax still outstanding at 28 August 2023 unless you have agreed a payment plan with HMRC.
If you have any questions for Rob or the team, do get in touch on 01242 776000 or tax@randall-payne.co.uk.
