Interest on unpaid tax bills increases again
The Bank of England’s base rate has crept up again, causing late payment interest rates to increase from next week. What are the new charges, and is there an end in sight to these increases?
The Bank of England’s base rate increased on 11 May from 4.25% to 4.5% as the government attempts to curb inflation. As HMRC’s late payment and repayment interest rates are linked to the base rate, they will also increase. From 22 May 2023 the following rates apply:
- Late corporation tax paid quarterly – 5.5%
- Interest on overpaid corporation tax – 4.25%
From 31 May, the rates for other taxes will apply:
- Late payment interest – 7%
- Interest on overpaid tax – 3.5%
HMRC stated that the rates compare favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits. This is the twelfth successive increase in rates since December 2021. However, there may be light at the end of the tunnel as the Office for National Statistics has confirmed inflation fell back into single figures at 8.7% in April, largely due to energy prices stabilising. Food inflation is still high though, and it’s possible the base rate will increase again before it starts to fall.
Related Topics
-
Advance assurance pilot confirmed
There have been a number of changes to how research and development tax credits are claimed in recent years. HMRC has now confirmed that a pilot of a new clearance procedure will begin later this year. What do we know so far?
-
Homeworking: claiming input tax on subsistence expenses?
Some of your staff work remotely, but their homes aren’t suited to it. You have agreed to pay for rented office space, or for refreshments if they work from, say, a café. Can you claim input tax on these expenses?
-
Beating the landlord tax hikes
Once again, landlords will be hit by tax increases announced in the Budget, even if they are operating through a company. What are the changes, and can anything be done to mitigate them?