ICAEW.com works better with JavaScript enabled.

TAX NEWS

HMRC interest rates for late and early payments increase again

Article

Published: 20 Dec 2022 Update History

As HMRC interest rates are linked to the Bank of England base rate, its 15 December increase from 3% to 3.5% has triggered another increase in rates for late payments and repayment of tax.

HMRC has announced increases to both interest charged on late paid tax and the rate paid on repayments of tax. These rates will also apply for VAT for amounts due in relation to periods beginning on or after 1 January 2023.

The rate will increase with effect from 26 December 2022 for late quarterly instalment payments, while late payment interest for other late payments will increase from 6 January 2023.

The rate of interest on unpaid instalments of corporation tax liabilities is calculated as base rate plus one. Therefore, it will increase to 4.5% from 26 December 2022.

The rate of interest for the late payment of other taxes is calculated as base rate plus 2.5, so it will increase to 6% from 6 January 2023.

The rate of interest paid by HMRC on the overpayment of tax is calculated as base rate minus one, which means an increase to 2.5% on 6 January 2023.

Late payment interest is something that has not previously applied to late payment of VAT returns. However, these rates will now also apply for late payments and repayments of VAT for amounts due in relation to periods beginning on or after 1 January 2023.

Read more

 

 
The Tax Faculty

ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty

More from the Tax Faculty

Latest news
Making tax digital image
TAXwire

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter

Practical guidance
Cover
TAXline

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image
Webinars

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.