HMRC interest rates have increased02/05/2023
As a result of the decision made by the Bank of England’s Monetary Policy Committee to raise the Bank of England base rate to 4.25%, His Majesty’s Revenue and Customs (HMRC) has announced an increase in the interest rate paid on tax repayments, as well as the interest rate levied on taxes paid late.
Since interest rates charged by HMRC are tied to the base rate set by the Bank of England, the increase in that rate from 4% to 4.25% that took place on 23 March, 2023, resulted in a further increase in the rates charged for late payments and the repayment of tax debt.
The rise in the late payment penalty for quarterly instalment payments took effect on 3 April, 2023, according HMRC’s announcement. The increased cost of the late payment interest took effect on 13 April, 2023, for all other types of late payments.
The amount of interest charged for unpaid instalments of corporate tax bills is determined by adding one percentage point to the base rate. Beginning on 3 April, 2023, it was increased to 5.25%.
The interest rate for the late payment of other taxes is computed as the base rate + 2.5, and as a result, it increased to 6.75% as of the 13 April 2023.
The amount of interest that will be paid by HMRC for an overpayment of tax is determined by subtracting one from the base rate. On 13 April, 2023, it increased to 3.25% from its current level.
If you have any questions about the interest rate increase – or any other tax questions – please contact JW Hinks on 0121 456 0190. Our friendly and professional team of tax experts can ensure you are aware of all the relevant obligations and not paying more tax than you need to.