The taxman has been busy this month – no surprise given it is the time when self-assessment returns need to be filed. But anyone who misses the deadline of January 31 faces a new set of interest rates for penalties that were only published on December 20 last year.
The new rates for late payments
The current HMRC interest rate for late payment of tax is the Bank of England (BoE) base rate plus 2.5%. This means that as of January 6, the current rate of interest on late payments is 6%. This applies to Income Tax, National Insurance, Capital Gains Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax – from October 1, 1999 – and Corporation Tax.
However, if you are owed money by HMRC, the amount of interest you can expect to be paid on that outstanding amount is considerably lower. As of January 6, the amount HMRC will pay you in interest on money owed is 2.5%. You can find out more information about where these figures apply and historical data on Gov.uk.
When do interest rates apply on late payments?
Interest rates apply if you pay your tax later than it is due, and interest will start to accrue from February 1, 2023, if you miss the January 31 payment deadline, and you would also get a £100 late filing penalty. You would then face an additional penalty of £10 per day if your return is up to three months late, with a maximum of £900 fined. If you still have not filed within six months, then you can face a £300 fine or 5% of the amount due, whichever is higher. The same applies if you have failed to file by the time 12 months have passed.
We can help you meet your obligations
If you think you could be facing interest charges from HMRC on the late payment of tax due, then speak to your accountant now and find out what we can do to help.
