A statement from the Bank of England on Thursday prompted His Majesty’s Revenue and Customs to announce a review of the fees charged for late tax payments and refunds. The base rate of interest was cut from 5.0% to 4.75% by the Bank of England’s Monetary Policy Committee on 7 November.
HMRC Interest Rates Linked to Bank of England to Decrease!
Influenced by the base rate of the Bank of England, HMRC interest rates will be reduced. It will apply to persons who are late with payments and repayments.
The new interest rates will come into effect for quarterly payments on 18 November 2024, and non-quarterly payments on 26 November 2024.
The rates of interest are set according to the Bank of England base rate because of government legislation. Currently, what is the interest on outstanding arrears? For repayments, the interest has a floor rate of 0.5%, and is calculated as the base minus 1%.
Important dates for the new rates:
- November 18, 2024: New rates for quarterly instalment payments.
- November 26, 2024: New rates for non-quarterly instalment payment
HMRC Highlights Fairness and Prompt Payment Incentives in New Interest Rates
According to the Government, the difference between interest paid on deposits and interest imposed on loans or overdrafts compares favourably with commercial practice. The difference between late payment interest and repayment interest is in line with the policies of other tax authorities around the world.
A spokesman said: “The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay.”
