HMRC Increases Interest Rate

The Bank of England’s Monetary Policy Committee convened on the 10th of May 2023, voting 7 to 2 to raise interest rates by 25 basis points to 4.5%, a move intended to tackle the ongoing issue of inflation ...

This represents the twelfth successive increase by the MPC and HMRC interest rates, which are directly tied to the Bank of England base rate, have likewise seen an increase. HMRC has responded to these changes in two key areas: the interest charged on overdue taxes, and the rate paid on tax reimbursements.

To break down the specifics:

- The interest on unpaid instalments of corporation tax liabilities, calculated as the base rate plus one, will rise
- The interest for the late payment of other taxes, calculated as the base rate plus 2.5, will also experience an increase
- The interest rate paid by HMRC on the overpayment of tax, calculated as the base rate minus one, will correspondingly increase
- These adjustments apply to all taxes, including VAT for amounts due relative to periods starting on or after 1 January 2023

In these fluctuating financial circumstances, a reliable and experienced tax advisor is essential to navigate the increasingly intricate tax regulations and effectively plan to reduce tax liabilities where possible.

I always work to guide my clients through the labyrinthine tax regulations and provide strategic advice to grow their businesses and enhance profitability.

I'll keep you updated on any further developments.

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