Interest rates on late tax payments have increased following the latest hike in the Bank of England base rate, HM Revenue & Customs (HMRC) has announced.
Since 23 August, the late payment interest rate has increased to 4.25 per cent. This is the highest rate applied to late tax payments since the financial crisis in January 2009.
This change will place yet more pressure on businesses and individuals who are struggling to pay their tax bills alongside the cost-of-living crisis.
Late payment interest is payable on late payments of Income Tax, Capital Gains Tax, Stamp Duty Land Tax and National Insurance contributions. The Corporation Tax pay and file rate also increased to 4.25 per cent.
How are the rates set?
HMRC interest rates are set in legislation and are linked to the Bank of England base rate, so the rise is automatically triggered.
The Bank of England voted in favour of the 0.5 percentage point increase early in August.
What is HMRC repayment interest?
If your company or organisation pays too much Corporation Tax, HMRC will repay what you have overpaid and may also pay you interest on it.
The repayment interest rate has increased for the first time since 29 September 2009 to 0.75 per cent, up from 0.5 per cent.
Link: HMRC interest rates for late and early payments
