Interest rates for late payment of taxes

Understanding Changes to Tax Interest Rates

Recent changes to tax interest rates have come into effect following the Bank of England’s decision to increase the base rate. Understanding these updates is important to avoid surprises when dealing with tax payments or repayments.

Key Changes to Interest Rates

Earlier this month, the Bank of England raised the base rate from 0.25% to 0.5%. This change has resulted in an increase in the interest charged on the late payment of taxes. Effective from 21 November 2017, the rate increased from 2.75% to 3%.

However, there is an exception for corporation tax paid through quarterly instalments. For these payments, the interest rate rose earlier, from 1.25% to 1.5%, effective from 13 November 2017.

Repayment Supplement Rate

While the interest charged on late payments has increased, the repayment supplement remains unchanged. It continues to be paid at a rate of 0.5%, offering consistency for taxpayers expecting repayments.

Implications of the Changes

These changes to tax interest rates highlight the importance of staying informed about updates that may impact your tax obligations. Late payments now incur higher costs, making timely payments even more crucial.

For businesses paying corporation tax in quarterly instalments, it’s essential to factor in the increased rate when managing cash flow. Staying on top of these changes can help minimise unnecessary expenses.

Stay Informed About Tax Updates

Keeping up with changes to tax interest rates ensures you’re prepared for any financial adjustments. Whether you’re an individual taxpayer or a business managing corporate taxes, understanding these changes can help you plan more effectively.

If you need guidance or have concerns about these updates, get in touch with our team for expert advice. We are always happy to see how we can help. Plus, we offer a free introductory meeting so that you can find out what we do and how we do it. So, do call us today and let’s see how we can partner in your success!