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HMRC increases interest charges on late tax payments

The UK’s tax authority raised interest rates after the Bank of England base rate was raised.

The change applies from 21 August 2018 and affects the late payment of virtually every form of tax and duty. This includes income tax, national insurance and capital gains taxes, all of which have an impact on business owners and entrepreneurs. This new rate, which has risen from 3% to 3.25%, is the highest that businesses and private individuals have had to pay since 2009.

However, that new rate does not apply to late payments of corporation tax paid using the quarterly instalment payments scheme. From the 13 August 2018, that rate has risen from 1.5% to 1.75%.

These interest rate increases make it even more important for businesses to stay on top of their tax affairs. To ensure they pay their taxes on time, and in full, locals are turning to accountants here in Bebington and Wirral area for help. Experienced accountants usually start by putting in place processes that ensure income and expenditure are accurately recorded in a timely manner. Keeping accurate, up to date, records is essential for avoiding tax debts.

However, the HMRC has failed to raise the amount of interest they pay on funds they owe to businesses and private individuals. The UK’s tax body only pays 0.5% interest to them. This is now below the Bank of England base rate of 0.75%. This repayment interest rate has not been changed since September 2009.

Posted by Louise
August 28, 2018

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