Tax & Accounting News

Harris Lipman HMRC interest rates

29/01/2009

HM Revenue & Customs has announced a reduction in interest rates charged on late payments and paid on overpayments.

Key points of the changes, which took effect from 27 January 2009, except where stated, are detailed below. For further advice and guidance, please contact us.

Income tax, national insurance contributions, capital gains tax, stamp duties

The rate is reduced to 4.5% to 3.5%. This applies to late payments, tax credit repayments in case of fraud, neglect and on penalties charged or to make good a loss of tax wholly or partly due to taxpayer error.

For overpayments on these taxes, the interest rate changes from 0.75% to 0%.

Petroleum revenue tax, advance corporation tax

The interest rate reduces from 3.5% to 2.75% for development land tax, petroleum revenue tax and on advance corporation tax and income tax and company payments, due on or before 13 October 1999, paid late or overpaid.

Income tax due on company payments due on or after 14 October 1999

The interest rate on late payments is reduced from 4.5% to 3.5%.

Inheritance tax, capital transfer tax and estate duty

The interest rate for late payments or repayments reduces from 2% to 1%.

Corporation tax

From 19 January 2009, the interest rate on underpaid instalment payments reduces from 3% to 2.5%.  From the same date, the interest rate on overpaid instalment payments, and on corporation tax paid early (but not by instalments) reduces from 1.75% to 1.25%.

The interest rate on late payments or repayments of corporation tax for accounting periods ended on or before 30 September 1993 reduces from 3.5% to 2.75%.

The interest rate on unpaid corporation tax for accounting periods ending on or after 1 October 1993 reduces from 3.5% to 2.75%.

The interest rate on overpaid corporation tax for accounting periods ending on or after 1 October 1993 reduces from 0.5% to 0%.

The interest rate on unpaid corporation tax for accounting periods ending on or after 1 July 1999 (other than underpaid instalments) reduces from 4.5% to 3.5%.

The interest rate on overpaid corporation tax for accounting periods ending after 1 July 1999, in respect of periods after the normal due date, reduces from 1% to 0%.

Customs duty, environmental levies and tax, excise duties, insurance premium tax and VAT

The interest rate reduces from 4.5% to 3.5% where these taxes are undeclared, excessive repayments are made or, in the case of customs duty, late.

Where an official error has caused an overpayment, a failure to claim credit or a delay in certain repayments of VAT, insurance premium tax, climate change levy, aggregates levy and excise duties, or there has been undue delay in processing a claim for repayment of excise and customs duty, the interest rate reduces from 1% to 0%.

 

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