Following the Bank of England’s cut in its base rate from 0.5% to 0.25% on 4 August, HMRC has decided to cut some of its rates. What’s changing?
Good news. With effect from today (23 August 2016), HMRC is cutting the interest rate it charges on late payments from the 3% rate that has been in force since 29 September 2009 to 2.75%. This is because it uses a formula for charging interest of the Bank of England base rate (now 0.25%) plus 2.5%.
More good news. HMRC has confirmed that there is to be no change to the repayment interest rate which will remain at 0.5% – the minimum rate HMRC has set for repayment interest.
Tip. If you have a positive current account balance, you are likely to be earning less than 0.5% on it so you might want to consider paying some or all of the corporation tax before the due date to earn some interest on it.
HMRC’s late payment rate is being cut by 0.25% to 2.75% with effect from 23 August 2016. There’s no change to the 0.5% repayment rate.