Inland Revenue Adjusts Interest Rates

by Jason Gorringe, Tax-News.com, London

13 August 2004

The UK’s Inland Revenue has announced changes to the interest rate it charges on late tax payments and overpayments to reflect recent changes in the underlying market interest rates.

As a result, the rate of interest charged on outstanding income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax has changed from 6.5% to 7.5%

Meanwhile, the rate of interest on overpaid income tax, national insurance contributions, capital gains tax, stamp duty and stamp duty reserve tax (repayment supplement) has risen from 2.5% to 3.5%.

On unpaid corporation tax for accounting periods ending on or after 1 October 1993, the interest rate has moved from 5% to 6%. Interest on overpaid corporation tax for the same period has increased to 2.75% from 2%.

For accounting periods ending on or after 1 July 1999, the rate on underpaid corporation tax has changed from 6.5% to 7.5% whilst the Revenue now pays 4% on overpaid corporate tax from the same period.

The gap between the rate the Revenue now charges and pays has been criticised by members of the accounting profession, including Chas Roy-Chowdhury who labelled the 4% spread “inexcusable”, according to the Financial Times.

Recommended