Following the recent increase in the base rate announced by the Bank of England, HMRC has confirmed changes to payment interest rates.
The current late payment interest rate applied to the main taxes and duties has increased to 2.75%, from 2.60%, from the 4th January 2022. This is the first increase since March 2020 when rates were reduced at the beginning of Lockdown.
The repayment interest rate of 0.5% will remain unchanged.
The Corporation Tax pay and file interest rate has also been increased in line with general interest rate to 2.75% from the 4th January.
The rise affects all other HMRC late payment rates with an across the board increase of 0.15% to 2.75%. The exception is interest charged on underpaid quarterly instalment payments which increases to 1.25% from 27th December 2021.
If you have an amount of tax that has not been paid, please remember that it is far better to speak to HMRC before they contact you! Ideally, you would contact them before the tax became due, to agree a payment arrangement. this is because they are far more receptive in this situation, particularly if you’re struggling to pay as a result of the pandemic.