HMRC raise their rates on Overdue Tax

2 months, 1 week ago by Oliver Atkinson

Following on from the Bank of England’s 14th consecutive interest rate rise to 5.25%, HMRC has announced increased the interest rate on late payments and the rate paid on repayments of tax.

The new rate of 7.75% on interest payable by taxpayers on late payments, will take effect from 14th of August for quarterly
instalments payments and 22nd of August from non-quarterly instalments payments. Late payment interest is set at the base rate plus 2.5%.

Repayment interest, which is when HMRC owes the taxpayer money is set at the base rate minus 1%, which is equal to 4.25%. HMRC advises that the 3.5% difference between late payment interest and repayment interest, is inline with the policies of other global tax authorities and is more favourable in comparison to commercial loans/overdrafts.

Meanwhile, the rate of interest on unpaid corporation tax liabilities is calculated as the base rate plus 1%. Therefore, it will increase to 6.25% from 14 August 2023.

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