Attention all taxpayers! Starting next week (July 11th), delayed payments will incur higher interest charges!
As mentioned in our previous article, the Bank of England has continued to raise mortgage interest rates.
In line with this, HMRC has also made adjustments to the interest on overdue payments, with a maximum rate of 7.5%.
How are the rates determined?
Typically, the rates set by HMRC are linked to the Bank of England’s base rate.
Therefore, the rates set by HMRC will change at the same frequency as the base rate.
To ensure fairness, taxpayers will also receive fair compensation when they overpay.
Rate details:
Effective from July 11th, 2023, the penalties and repayment interest rates charged by HMRC are as follows:
- Late payment interest rate: 7.5%
- Repayment interest rate: 4.%
These rates currently apply to common taxes such as income tax, national insurance contributions, capital gains tax, normal self-assessment of corporation tax, and stamp duty land tax.
Effective from July 3rd, 2023, for interest arising from other self-assessment of corporation tax:
- 6% interest rate is charged on underpaid quarterly instalment payments.
- 4.75% interest rate is charged on overpaid quarterly instalment payments and early non-instalment payments.
How to pay the bill:
For most self-employed individuals, filing a self-assessment tax return and paying taxes on time is a common practice.
Usually, when you pay your self-assessment bill, you have the option to make weekly or monthly payments.
Different companies may have different final payment dates, and late payments will incur interest charges.
Payment through the HMRC app or online payment is allowed, but payment at the post office is no longer permitted.
If you choose to pay by bank transfer, there may be a 3-5 day delay, so early action is necessary.
Within 3-6 working days after completing the payment, you can check the payment status through your HMRC online account.
Need help?
When you receive an overdue payment letter from HMRC, do not attempt to ignore it.
Ignoring it will only accumulate more interest and penalties. If you are unsure about what to do, seek assistance from an accounting team.
If you are one of our clients, please feel free to reach out to our team at any time.
We are here with you!
