Late payment interest rates will increase from 3 October 2022 due to a further increase in the Bank of England’s base rate. Will you be affected?
The Bank of England base rate has now increased six times during 2022, with the latest increase from 1.75% to 2.25% on 22 September. As HMRC’s late payment and repayment interest rates are linked to the base rate, they are also set to increase. From 3 October 2022 the following rates will apply:
- Late corporation tax paid quarterly – 3.25%
From 11 October, the rates for other taxes will apply:
- Late payment interest – 4.75%
- Interest on overpaid tax – 1.25%
With the increase to late payment interest on income tax from 11 October, it would be worth checking whether you reduced your payments on account for 2021/22. You could consider at least drafting your tax returns as soon as possible to determine the final position. If the payments were reduced excessively, you can make good the shortfall before 11 October to avoid the higher level of penalty interest, which is likely to increase still further in the coming months.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.