An opportunity to reassess your tax strategies ...
Posted by Roger Eddowes on 28/11/2024 @ 8:00AM
In the wake of fluctuating economic conditions, HMRC has implemented significant cuts to interest rates associated with tax payments. These changes are crucial for both individuals and corporations managing their tax obligations ...
HMRC's approach toward taxation is now focusing on supporting taxpayers amid economic uncertainty!
On the 7th of November 2024, the Monetary Policy Committee of the Bank of England announced a decrease in the base rate from 5% to 4.75%, which directly affects HMRC's interest rates.
As of the 18th of November, the interest charged for late quarterly instalment payments of Corporation Tax will decrease from 6% to an adjusted rate of 5.75%. This reduction aims to alleviate the financial burden on businesses that may struggle to meet their tax deadlines!
Similarly, the interest rate for late payments of other taxes will drop from 7.5% to 7.25%, effective from the 26th of November 2024. These adjustments reflect a concerted effort by HMRC to align its rates with the overall economic climate.
Furthermore, HMRC also revised the interest rates it pays on overpayments. For the overpayment of quarterly instalment payments of corporation tax, the interest rate will be reduced from 4.75% to 4.5% starting on the same date as the corporation tax rates.
Likewise, the rate for overpayments of other taxes will diminish from 4% to 3.75%, effective from 26 November 2024. This aims to foster compliance while incentivising timely tax payments, creating a more balanced tax environment.
"The impact of these rate changes extends beyond immediate financial relief!"
They signal a pivotal shift in HMRC's approach toward taxation which is now focusing on supporting taxpayers amid economic uncertainty. Individuals and businesses alike should note that these rates, influenced by the Bank of England's decisions, could change as the Monetary Policy Committee is scheduled to review the base rate again on the 19 of December.
Taxpayers should be aware that starting on the 6th of April 2025, HMRC plans to raise the interest rates charged on unpaid tax liabilities by 1.5 percentage points. This increase will see the rate for quarterly instalment payments of corporation tax rise to 7.25%, while the rate for other taxes will reach 8.75%.
I do believe that these interest rate cuts present an opportunity for taxpayers to reassess their tax strategies. By understanding these new rates and their implications, individuals and businesses can make informed decisions that can lead to significant financial savings.
Staying informed about these developments is essential for prudent financial management and maximising potential benefits in the long run.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about HMRC's new interest rates for tax, it could be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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