Tax & Accounting News

HMRC Announces Harmonised Interest Rates

29/09/2009

HM Revenue and Customs (HMRC) has harmonised the interest rate it charges on late payments, and the rate it pays on overpaid taxes, in a bid to simplify the tax system.

As of 29 September, interest charged on late payments of tax will be the Bank of England base rate plus 2.5 (which would currently be three per cent), while interest paid on overpayments will be Bank of England base rate minus one, but with a new minimum rate of 0.5 per cent, so those owed money by HMRC will still receive some interest even with rates at their present historic lows.

For corporation tax quarterly installment payments, the new rate for late payments remains at 1.5 per cent and for over payments is 0.5 per cent, effective from 21 September.

The rates will change in line with any future changes to the Bank of England base rate within 13 days of the Monetary Policy Committee meeting.

Previously, the rate charged on late payments varied from 0 per cent to 2.5 per cent, while the present low base rate meant most overpayments were attracting no interest. HMRC had announced its intention to harmonise rates for taxes where it charged or paid interest in July.

For more information please contact us.