HMRC Increases Late Payment Interest Rate To 7%
Following the Bank of England’s latest increase in the base rate, HMRC has increased both late paid tax and the rate paid on repayments of tax.
The Bank increased the base rate from 4.25% to 4.5% on 11th May – this is the 12th consecutive rise.
The late payment and repayment interest rates follow this rise, and are applied to the main taxes and duties that HMRC currently charges and pays interest.
The late payment interest rate will increase by 0.25% to 7% as of 31st May 2023. This is the highest rate since the start of the financial crisis in November 2008.
Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gains tax, corporation tax pay and file, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 7%.
Repayment interest will also be increased from the current 3.25% rate to 3.5%.
Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments rose to 5.25% from 5% a week earlier on 22 May.
Amy Telford, Director at HTB Accountants, said:
“With interest rates on late payments rising, it’s now more important than ever for businesses pay their tax on time. With the help of HTB Accountants, we can help corporations plan their tax accordingly, preventing any unwelcome interest payments.”
For support on organising your corporation tax, get in touch with us today. For more information on this change, visit the Gov.uk website.