HMRC will scale back the rate of interest it costs on late tax funds to 7.25% from 18th November, following the latest minimize within the Financial institution of England’s base fee.
Nonetheless, this discount highlights a stark disparity: taxpayers will obtain solely 3.75% curiosity on tax refunds, leaving a 3.5% hole in favour of HMRC.
The revised rates of interest apply to new tax money owed and quarterly instalment taxpayers from 18th November and shall be efficient from twenty sixth November for these on non-quarterly plans. Whereas any discount in curiosity costs might sound helpful, tax insurance coverage specialist Qdos warns that the main focus ought to stay on assembly the thirty first January self-assessment deadline to keep away from late fee penalties.
Seb Maley, CEO of Qdos, voiced issues over the rate of interest distinction, stating, “The real talking point here – the elephant in the room – is the difference between the interest rate HMRC charges on late payments and the rate it offers on refunds. While this approach may align with practices of other tax authorities, it feels particularly unfair to the self-employed, who are often disproportionately impacted.”
With January’s self-assessment deadline approaching, taxpayers are reminded to prioritise well timed compliance to keep away from the 7.25% late fee rate of interest and extra penalties. Taxpayers awaiting refunds, nonetheless, might even see a diminished fee of three.75% – a disparity that raises questions on equity within the system.
Maley added, “More than ever, self-employed individuals need to be vigilant about tax compliance, as late payments can come at a high cost. HMRC’s higher charges on late payments compared to refunds remain a contentious issue that deserves further scrutiny.”
Because the self-assessment deadline nears, taxpayers are inspired to take all vital steps to make sure well timed funds, avoiding potential penalties in an financial local weather the place each proportion level issues.
