HMRC Announces New Rates Of Interest On Late And Overpaid Payments

by Jason Gorringe, Tax-News.com, London

04 January 2008

New rates of interest on direct and indirect taxes and national insurance contributions paid late and overpaid were announced on Friday. These new rates of interest, which take effect from 6 January 2008, are a result of the recent movement in market rates.

Under the new rules, the rate of interest charged on income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax paid late, tax credits overpayments in cases of fraud, neglect and on penalties charged, and on tax charged by an assessment for the purpose of making good to the Crown a loss of tax wholly or partly attributable to failure or error by the taxpayer changes from 8.5% to 7.5%.

The rate of interest on overpaid income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax (repayment supplement) changes from 4.00% to 3.00%

The rate of interest for development land tax, petroleum revenue tax (including supplementary petroleum duty and advance petroleum revenue tax), and on advance corporation tax and income tax on company payments which became due on or before 13 October 1999 paid late or overpaid changes from 6.5% to 5.75%.

The rate of interest on late payment of income tax on company payments which became due on or after 14 October 1999 changes from 8.5% to 7.5%.

The rate of interest for late payments or repayments of inheritance tax, capital transfer tax and estate duty changes from 5.0% to 4.0%.

Late payments or repayment of corporation tax for accounting periods ended on or before 30 September 1993 (pre CT (pay and file)), will change from 6.5% to 5.75% , and the rate of interest charged on unpaid corporation tax for accounting periods ending on or after 1 October 1993 (under CT (pay and file)) changes from 6.75% to 6.0%.

The rate of interest paid on overpaid corporation tax for accounting periods ending on or after 1 October 1993 (under CT (pay and file)) changes from 3.5% to 2.75%, whilst unpaid corporation tax for accounting periods ending on or after 1 July 1999 (other than underpaid CT instalments) changes from 8.5% to 7.5%.

Overpaid corporation tax for accounting periods ending after 1 July 1999, in respect of periods after the normal due date, changes from 5.0% to 4.0%.

Underdeclared VAT, air passenger duty, insurance premium tax, landfill tax, climate change levy, aggregates levy; excessive repayments of VAT, insurance premium tax, land fill tax, climate change levy, aggregates levy and customs duties recovered by assessment; and late payment of customs duty all change from 8.5 per cent to 7.5 per cent.

Finally, the rate of statutory interest paid where an official error has caused an overpayment, a failure to claim credit, or a delay in certain repayments of VAT, insurance premium tax, land fill tax, climate change levy, aggregates levy and excise duties; or where there has been undue delay in processing a claim for repayment of excise duty and customs duty changes from 5.0% to 4.0%.

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