In light of the Monetary Policy Committee's recent decision to raise the Bank of England base rate to 5.25%, HMRC has declared an uptick in their own interest rates applied to both late tax payments and the interest rate on tax repayments ...
- Link with the Bank of England Base Rate: The interest rates set by HMRC are directly tied to the Bank of England base rate. The recent surge from 5% to 5.25% on 3 August has set off another round of rate adjustments for both late tax payments and tax repayments.
- Corporation Tax Liabilities: The interest rate on unpaid instalments of corporation tax is determined as the base rate plus one. This means the rate will climb to 6.25% starting from 14 August 2023.
- Late Payment of Other Taxes: The interest rate for other late tax payments is the base rate plus 2.5. As a result, this rate will jump to 7.75% from 22 August 2023.
- Overpayment of Tax: The interest rate that HMRC pays on tax overpayments is the base rate minus one. This rate will see an increase to 4.25% on 22 August 2023.
I am beginning to wonder how these regular HMRC interest rate hikes are going to affect small businesses, especially those with significant tax liabilities and also, what are the broader economic implications going to be?
Given the trend, can we expect further rate hikes in the near future, and how should you, as a business owner, prepare for them?
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.