Interest on unpaid tax bills increases again
The Bank of England’s base rate has crept up again, causing late payment interest rates to increase from next week. What are the new charges, and is there an end in sight to these increases?
The Bank of England’s base rate increased on 11 May from 4.25% to 4.5% as the government attempts to curb inflation. As HMRC’s late payment and repayment interest rates are linked to the base rate, they will also increase. From 22 May 2023 the following rates apply:
- Late corporation tax paid quarterly – 5.5%
- Interest on overpaid corporation tax – 4.25%
From 31 May, the rates for other taxes will apply:
- Late payment interest – 7%
- Interest on overpaid tax – 3.5%
HMRC stated that the rates compare favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits. This is the twelfth successive increase in rates since December 2021. However, there may be light at the end of the tunnel as the Office for National Statistics has confirmed inflation fell back into single figures at 8.7% in April, largely due to energy prices stabilising. Food inflation is still high though, and it’s possible the base rate will increase again before it starts to fall.
Related Topics
-
Should you use simplified expenses?
The flat rate expense you can claim for business journeys if you’re self-employed has increased to 55p per mile. Can you use simplified expenses for motoring costs and is it more tax efficient to do so?
-
HMRC targets smaller tax debts
HMRC is stepping up collection of lower‑value tax debts, signalling a firmer approach to long‑overdue liabilities while encouraging earlier engagement. Direct recovery from bank and building society accounts has been re‑introduced on a trial basis, alongside a government consultation on HMRC powers and tax administration. What are the key points to be aware of?
-
New digital process for NI refunds
HMRC has introduced an online service to claim a refund of Class 1 NI contributions but not everyone can use it. What can you do if you've paid too much NI?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.