HMRC late fees are increasing this week following suit with the Bank of England base rate (Image: GETTY)
This week, HMRC will be implementing their on late payments and repayments, following the Bank of England’s base rate drop earlier this month.
As the base rate fell from 5% to 4.75%, ’s interest will be making an even bigger drop from November 26.
The on late payments will be dropping from 7.50% to 7.25% and the on repayments will dip to 3.75% from 4%.
’s are directly tied to the Bank of England’s base rate decisions. Late payment are implemented on anyone paying or filing their taxes after a relevant deadline has passed.
This is to encourage people to pay their tax on time, or quickly resolve any underpayments to avoid the interest piling up.
Repayments, on the other hand, occur when individuals or corporations have overpaid taxes or fees and require refunds from .
:
They receive the additional interest on these payments to compensate taxpayers for the loss of the use of their money.
These are the rates applied to late installments and repayments on main taxes and duties including the likes of:
- Income Tax
- National Insurance contributions
- Capital Gains Tax, Stamp Duty
- Stampy Duty Reserve Tax
- VAT
- Corporation Tax (for paying and filing)
- Corporation Tax self assessment
- Inheritance Tax
- Capital Transfer Tax
- Estate Duty
- Interest on judgement debt taxation matters
Certain interest charges have already been altered, such as the interest on underpaid quarterly instalment payments of Corporation Tax self assessments which fell to 5.75% on November 18.
Don’t miss… [UPDATE]
The late payment interest has a set lower limit of 2.5% which it adds the base rate onto, meaning it won’t dip below this even if the base rate does.
This occurred during the pandemic where the base rate stubbornly remained below 1% until June 2022 while ’s late payment never dropped below 2.60% throughout that period.
Conversely, the repayment rate almost contradicts the base rate as it’s calculated by subtracting 1% from the base rate.
It also has a lower limit of 0.5%, which it sat at for nearly 2 years during the pandemic.