With the interest rates in banks changing, HMRCs interest rates for late payment and repayments of tax have also changed.<\/p>\n
HMRC interest rates are set in legislation and are linked to the Bank of England base rate.
\nThere are 2 rates:<\/p>\n
The late payment interest rate encourages prompt payment. It ensures fairness for those who pay their tax on time.
\nThe repayment interest rate compensates taxpayers fairly, when they overpay or pay early, for loss of use of their money.<\/p>\n
As at the time of this article, the current late payment and repayment interest rates applied to the main taxes and duties that HMRC currently charges and pays interest on are:<\/p>\n
These rates apply for Corporation Tax, Self Assessment, Income Tax, Capital Gains Tax, VAT, Stamp Duty and National Insurance.<\/p>\n
VAT Specifics – starting on or after 1 January 2023<\/strong><\/span><\/a><\/p>\n The default surcharge is being replaced with new penalties for late submissions or payments.<\/p>\n Any nil or repayment VAT returns received late will also be subject to late submission penalty points and financial penalties.<\/p>\n Late Submission of VAT<\/strong><\/p>\n For each VAT Return you submit late you will receive one late submission penalty point. The points are re-set if returns are submitted and paid on\/before the due date for the period of compliance, and all historic returns have been received by HMRC.<\/p>\n Late Payment of VAT\u00a0<\/strong><\/p>\n Late payment INTEREST will be charged at 2.5% + Bank of England base rate – From 1st January 2023<\/p>\n Late payment PENALTIES will be charged depending on when you make payment – From 1st January 2024<\/p>\n Paid up to 15 days late – No Penalty You will receive a second penalty calculated at a daily rate of 4% per year for the duration of the outstanding balance.<\/p>\n Repayment Interest<\/strong><\/p>\n HMRC will pay you repayment interest on any VAT that you are owed.<\/p>\n This will be calculated from the day after the due date or the date of submission (whichever is later) and until the day HMRC pays you the repayment VAT amount due to you in full.<\/p>\n Repayment interest, set at base rate minus 1%, with a lower limit of 0.5%<\/p>\n
\nOnce a penalty threshold is reached, you will receive a \u00a3200 penalty and a further \u00a3200 penalty for each subsequent late submission.<\/p>\n\n\n
\n Submission frequency<\/em><\/th>\n Penalty points threshold<\/em><\/th>\n Period of compliance<\/em><\/th>\n<\/tr>\n<\/thead>\n\n \n Annually<\/td>\n 2<\/td>\n 24 months<\/td>\n<\/tr>\n \n Quarterly<\/td>\n 4<\/td>\n 12 months<\/td>\n<\/tr>\n \n Monthly<\/td>\n 5<\/td>\n 6 months<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nPaid between 16 and 30 days late – 2% penalty based on the amount owed at day 15
\nPaid 31 days or more late – there will be the initial 2% on the VAT you owe at day 15 plus 2% on the VAT you owe at day 30.<\/p>\n
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