Craig Simpson, Tax Partner at Bates Weston comments on the impact of increasing interest rates on overdue tax charges.
HMRC have announced a further increase in interest charges on late paid taxation.
We have lived in a low interest rate regime for many years and paying tax late was not particularly costly when the interest rate was 2.75% a year ago. Rates have been steadily increases during 2022 and from 6 January 2023 the rate of interest on late paid taxation will be 6% per annum. If your company makes corporation tax payments by instalments the rate of interest on late payments is now 4.5% compared to 1.5% a year ago. Repayment supplement has increased to 2.5% but, as always, this does not increase at the same rate as for late payments.
You may want to ensure payments are made in a timely manner to avoid these additional costs.
This guidance is generic in nature and does not constitute advice. You should take no action based upon it without consulting ourselves or your own professional advisor.