Taxpayers who are late in meeting their tax bills are to be charged a lower rate of interest on unpaid liabilities.
As from 16 and 24 March, HM Revenue and Customs has announced that the interest levied on late tax payments will fall in many cases following the Bank of England’s decision to reduce the base rate.
The reduced rates that cover quarterly instalment payments and early payments of corporation tax not due by instalments take effect from 16 March 2009.
The reduced rates that cover all other direct and indirect taxes and National Insurance contributions paid late and overpaid take effect from 24 March 2009.
As a result from 24 March, 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 falls from 3.5 per cent to 2.5 per cent.
In the case of income tax, National Insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax that has been overpaid by taxpayers, the rate of interest remains at 0 per cent.
The rate of interest charged on underpaid instalment payments of corporation tax drops from 2 per cent to 1.5 per cent, the change taking effect eight days earlier, as from 16 March.
The rate of interest on overpaid instalment payments of corporation tax, and on corporation tax paid early (but not due by instalments), falls from 0.75 per cent to 0.25 per cent, again as from 16 March.
The rate of interest for late payments or repayments of inheritance tax, capital transfer tax and estate duty comes down from 1 per cent to 0 per cent.
The rate of default interest charged on underdeclared VAT, air passenger duty, insurance premium tax, landfill tax, climate change levy, aggregates levy, as well as excessive repayments of VAT, insurance premium tax, landfill tax, climate change levy, aggregates levy and customs duties recovered by assessment late payment, falls from 3.5 per cent to 2.5 per cent.
