The interest rates of tax debts have continued to rise as inflation rockets up. The Bank of England recently decided to increase the base rate by 0.75 per cent to 3 per cent, as a result of surging inflation.
HMRC interest rates are set in legislation and are linked to the Bank of England base rate, so the rise is automatically triggered.
Due to this, the late payment and repayment interest rates applied to tax debts will rise to:
The late payment rate has continually increased this year, making it all the more essential to settle any tax debts with HMRC.
This interest is due on late tax bills, including:
The Corporation Tax pay and file rate also increase to 5.50 per cent. Meanwhile, the interest paid on overpaid quarterly instalment payments of Corporation Tax and on early payments of Corporation tax not due by instalments rises to 2.75 per cent.
With further increases in the Bank of England base rate expected imminently, the cost of late tax payments could quickly increase in the months to come, highlighting the importance of paying tax on time.
If you have any queries about how these changes may affect you, please contact us.