Background
We wrote recently regarding the late payment surcharge and filing penalty waivers that HMRC introduced for the 2020/21 self-assessment tax returns. As a result of these relaxations a number of clients are delaying paying their income tax, preferring instead to suffer an interest charge in the short term. We are writing now to advise that, as a result of the recent increase in the Bank of England Base Rate, the interest rate applicable to overdue income tax is also going up.
Detail
The interest rate charged by HMRC on late payment of tax will increase from 2.75% per annum to 3% from next Monday, 21st February. This is the second increase in 2 months being 2.6% prior to 4 January 2022.
These rates will apply to unpaid income tax from the due date of 31 January 2022. In addition any tax still outstanding on 1 April 2022 will be subject to an additional late payment surcharge of 5%.
The increased interest rate will also apply to other overdue taxes including:
• Capital Gains Tax
• Stamp Duty
• Stamp Duty Land Tax
• National Insurance Contributions
• Corporation Tax
• Inheritance Tax
• VAT
Please note that the interest rate on over paid tax is not going up and will remain at 0.5% where it has been since September 2009.
If you have any queries or would like more information regarding tax payments or related surcharges, please speak to your usual contact at the firm.
Our Current working arrangement – We remain ‘Open for business’
Our staff have now returned to mainly office based working, whilst continuing to work from home at other times. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
To see our other news items please visit our Muras Baker Jones – Blog.