Revenue cuts overpaid tax interest rates to zero
HM Revenue and Customs has announced that, as from 27 January, the rate of interest to be paid on money owing to taxpayers falls to 0 per cent.
This means that anyone who overpays income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax will receive no interest on the amount while it is held by HMRC before a refund.
The drop from the previous figure of 0.75 per cent is the result of HMRC’s review of its interest rate charges in the light of the recent cut in the base rate by the Bank of England.
Companies that have overpaid corporation tax for accounting periods ending after 1 July 1999 have been getting 0 per cent since 19 January when the rate change affecting them was introduced.
For taxpayers who owe HMRC money, there is also a reduction in the interest due on the outstanding amounts, but it hasn’t fallen to 0 per cent.
HMRC said that the interest they charge on overdue income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax paid late drops from 4.5 per cent to 3.5 per cent.
Nevertheless, HMRC did say that the interest it pays cannot slip into negative territory, so that taxpayers will never find themselves in the position of paying the Revenue interest on the money it owes to them.
This is because HMRC must, by law, pay a commercial rate of interest on tax that has been overcharged or overpaid.
Even so, those taxpayers awaiting a refund will still see a depreciation in the value of their money as inflation is riding at 3.1 per cent.
Full details of the new Revenue interest rates can be found at http://www.hmrc.gov.uk/news/int-rate-news.htm