Paying your taxes on time is crucial for businesses, not just to stay compliant, but also to avoid avoidable fines and penalties.
When payments are late, you can face financial penalties and interest charges that might not only strain your budget but also impact your business’s overall economic health.
What are the benefits of timely payments?
Paying your taxes on time offers several advantages for your business:
Recent changes to interest rates
The Bank of England’s recent decision to lower the base rate to five per cent from 1 August—the first cut in over four years—has prompted a reduction in HMRC interest rates as well.
Starting from 20 August, the late payment interest rate has decreased to 7.5 per cent from 7.75 per cent, and the repayment interest rate has dropped to four per cent from 4.25 per cent.
For businesses, this means slightly reduced financial penalties for late tax payments, which provides some relief, particularly for those who have been grappling with higher rates.
Additionally, the Corporation Tax self-assessment interest rate has fallen to six per cent from 6.25 per cent.
Strategies to ensure timely payments
Automate payments – Setting up automatic payments through your bank or accounting software can ensure your taxes are paid on time.
Keep detailed records - Maintaining up-to-date records of all financial transactions helps streamline tax return preparation and keeps you informed about your tax liabilities well before due dates.
Use reminders - Remember to set up reminders for all upcoming tax deadlines to prevent the last-minute rush. Make sure your reminder is not just on the deadline date – you want to give yourself plenty of time to prepare.
