Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

HMRC on to a nice little earner with 6% interest charges for unpaid tax

by January 6, 2023
January 6, 2023
HMRC on to a nice little earner with 6% interest charges for unpaid tax

The interest rate the taxman charges on unpaid tax has reached a 14-year high of 6 per cent, but if you expect the same return on anything it owes you, you’ll be out of luck.

HM Revenue & Customs increased the rate on unpaid income tax, national insurance, capital gains tax, stamp duty, corporation tax and inheritance tax by 0.5 percentage points today after last month’s Bank of England base rate rise. This is the highest since November 2008, when HMRC charged 6.5 per cent.

A year of rising base rate, which is now 3.5 per cent, up from 0.1 per cent in December 2021, means it has more than doubled since last January, when it was 2.75 per cent. Someone who owed £20,000 in tax would now be charged £1,200 in interest, against £550 then.

Yet those owed money by HMRC will receive far less. The rate will increase to 2.5 per cent, but this has only gone up by two percentage points since January last year.

The 3.5 percentage point gap is because of 2011 legislation that guarantees HMRC charges 2.5 percentage points above the base rate, but pays one percentage point below it — to a minimum of 0.5 per cent.

“The interest rate on late paid tax has doubled in less than a year and while it is not quite in payday lender territory, delaying paying HMRC has a real cost to it,” Tim Stovold, head of tax at the accountancy firm Moore Kingston Smith, said.

“Although it seems unfair, those who have overpaid their tax cannot expect a windfall. HMRC has always maintained the 3.5 per cent discount from the late payment rate to the interest on overpaid tax.”

Any interest is on top of any fines you receive for missing the January 31 deadline to file your self-assessment return and pay any tax due. HMRC said this week that 5.7 million people still needed to file their returns, with the prospect of a £100 fine for filing late. Interest is in turn added to these fines.

Dawn Register, from the accountants BDO, said: “If you are going to struggle to pay your bill on time, agreeing a formal time to pay arrangement with HMRC before the penalty is charged will mean as long as you stick to the instalment payments agreed, the penalty won’t be charged. However, interest will be applied.”

HMRC said: “The interest we charge and pay delivers fairness for all. It ensures we don’t encourage people to overpay their tax to secure a higher interest rate than available commercially, while those paying late don’t get an unfair financial advantage over those paying on time.”

Read more:
HMRC on to a nice little earner with 6% interest charges for unpaid tax

0
FacebookTwitterGoogle +Pinterest
previous post
Kamala Harris reveals Biden’s 2023 priorities includes inflation, job growth: ‘Never been more optimistic’
next post
Shopify bans meetings of more than two people

You may also like

Breaking down stereotypes: Why Apprenticeships are good for...

April 6, 2023

Sky Sports presenter loses IR35 appeal in latest...

April 21, 2023

McLaren receives £30m boost from Bahraini owners

February 5, 2024

Avoid These: 5 Web Design Mistakes that Hurt...

September 5, 2024

Calls for Government tax breaks for micro businesses

August 2, 2023

UK’s trade deficit widens to record £27.9bn as...

August 12, 2022

Microsoft turns up its chatbot stake

January 24, 2023

Kwarteng disregarded warnings on mini-budget, MPs told

December 13, 2022

Guide to the Tennessee Real Estate: Discover Your...

September 27, 2022

The difference between insolvency and bankruptcy, explained.

September 30, 2022

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Silver’s Surge is No Fluke—Here’s the Strange Ratio Driving It

      June 6, 2025
    • Friday Feature: Incubate Debate

      June 6, 2025
    • Risch urges ‘top to bottom’ USAID spending review after waste, fraud exposed

      June 6, 2025
    • Universities in Libertarian Land

      June 6, 2025
    • Elon Musk may speak to Trump aides in push to calm feud

      June 6, 2025
    • Everyone Talks About Leaving a Better Planet for Our Children: Why Don’t We Leave Better Children for Our Planet?

      June 6, 2025

    Categories

    • Business (8,149)
    • Investing (2,013)
    • Politics (15,545)
    • Stocks (3,131)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved