HMRC Interest Rates
HMRC have announced another series of changes to the rates of interest on direct and indirect taxes and national insurance contributions paid late and overpaid. The new rates will take effect from 19 January 2009 for quarterly instalments and early payments of corporation tax. The remaining changes will take effect from 27 January 2009.
It is interesting to note that there are now a number of interest rates which have been reduced to zero. These relate to certain overpaid taxes and statutory interest.
The changes are as follows:
Income Tax / Capital Gains Tax / Stamp Duties / National Insurance Contributions
· The rate of interest due on tax paid late, penalties and tax charged by assessment changes from 4.5% to 3%
· The rate of interest in overpaid taxes reduces from 0.75% to 0%
Petroleum Revenue Tax / Advance Corporation tax / Development Land tax
· The rate of interest changes from 3.5% to 2.75%
Income Tax on company payments due on or after 14 October 1999
· The rate of interest changes from 4.5% to 3.5%
· The rate of interest changes from 2% to 1%
· On underpaid instalment payments of CT to 2.5% (from 3%). Note this change takes effect from 19 January 2009.
· On overpaid instalment payments of CT and on CT paid early (not by instalments) to 1.25% (from 1.75%). Note this change takes effect from 19 January 2009.
– On late payments in relation to accounting periods ending on or before 30 September 1993 before CT Pay & file to 2.75% (from 3.5%). These rates are the same for unpaid CT after 1 October 1993.
· On overpaid CT for accounting periods ending on or after 1 October 1993 to 0% (from 0.5%)
· On unpaid CT for accounting periods on or after 1 July 1999 (other than underpaid instalments) to 3.5% (from 4.5%)
· On overpaid CT after 1 July 1999 for periods after the normal due date 0% (from 1%)
Default Interest (mainly relating to underdeclared VAT / Late payments of Customs Duty etc)
· The rate of interest changes from 4.5% to 3%
Statutory Interest (mainly relating to VAT and other indirect taxes)
· The rate of interest in respect of official error changes from 1% to 0%