HMRC ANNOUNCES HIGHER INTEREST RATES FOR LATE PAYMENT - Revenue & Customs has announced new interest rates for late payment of taxes and national insurance contributions with effect from 6 September. The rates of interest paid by HMRC on overpaid tax are also increased. The main changes are set out below.

Income tax, national insurance contributions, capital gains tax, stamp duties etc.
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 6.5 per cent to 7.5 per cent.

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 2.25 per cent to 3 per cent.

Inheritance tax etc.
The rate of interest for late payment or repayments of inheritance tax changes from 3 per cent to 4 per cent.

Corporation tax
The rate of interest on unpaid corporation tax for accounting periods ending on or after 1 July 1999 (other than underpaid CT instalments) changes from 6.5 per cent to 7.5 per cent.

The rate of interest on overpaid corporation tax for accounting periods ending after 1 July 1999, in respect of periods after the normal due date, changes from 3 per cent to 4 per cent.

Customs duty, environmental levies and tax, excise duties, insurance premium tax and VAT
The rate of default interest charged on:

• underdeclared VAT, air passenger duty, insurance premium tax, landfill tax, climate change levy, aggregates levy;
  
• excessive repayments of VAT, insurance premium tax, landfill tax, climate change levy, aggregates levy and customs duties recovered by assessment; and
  
• late payment of customs duty

changes from 6.5 per cent to 7.5 per cent.

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, landfill tax, climate change levy, aggregates levy and excise duties, and
  
• where there has been undue delay in processing a claim for repayment of excise duty and customs duty

changes from 3 per cent to 4 per cent.

Source: taxationweb