HMRC late payment interest rates to be revised
03 February 2023
Following the announcement of the increase of interest rate to 4% by the Bank of England, HM Revenue and Customs (HMRC) has outlined interest rates for late payments and repayments will be revised.
Consequently, these changes will come into effect on:
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13 February 2023 for quarterly instalment payments
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21 February 2023 for non-quarterly instalments payments.
HMRC interest rates are set in legislation and are linked to the Bank of England base rate. Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit - or ‘minimum floor’ - of 0.5%.
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.
Therefore, as payroll professionals to remain complaint it is vital to have a controlled schedule of your PAYE payments and ensure the correct unique reference is used. You can read more on the topic on the GOV.UK site. Guidance link for information on the interest rates for payments on GOV.UK will be updated shortly.
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