HMRC interest rates cut

New rates of interest on direct and indirect taxes and NICs paid late and overpaid take effect from 6 January 2009.

Legislation has also been put in place to enable HMRC to change interest rates faster where there is movement in market rates. From 7 January 2009 most rates will change thirteen working days after the meeting of the Monetary Policy Committee of the Bank of England. Under previous legislation it took around a month to change most of the rates.

The new rates of interest from 6 January 2009 are as follows:

Income tax, NICs, 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 5.5 per cent to 4.5 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 1.5 per cent to 0.75 per cent.

Petroleum revenue tax, advance corporation tax etc.

The rate of interest for development land tax, petroleum revenue tax (including supplementary petroleum duty and advance petroleum revenue tax), and on advance corporation tax and income tax on company payments which became due on or before 13 October 1999 paid late or overpaid changes from 4.25 per cent to 3.5 per cent.

Income tax on company payments that became due on or after 14 October 1999

The rate of interest on late payment of income tax on company payments which became due on or after 14 October 1999 changes from 5.5 per cent to 4.5 per cent.

Inheritance tax etc.

The rate of interest for late payments or repayments of inheritance tax, capital transfer tax and estate duty changes from 3.0 per cent to 2.0 per cent.

Corporation tax

The rate of interest for either late payments or repayment of corporation tax for accounting periods ended on or before 30 September 1993 (pre CT (pay and file)), changes from 4.25 per cent to 3.5 per cent.

The rate of interest charged on unpaid corporation tax for accounting periods ending on or after 1 October 1993 (under CT (pay and file)) changes from 4.25 per cent to 3.5 per cent.

The rate of interest paid on overpaid corporation tax for accounting periods ending on or after 1 October 1993 (under CT (pay and file)) changes from 1.25 per cent to 0.5 per cent.

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 5.5 per cent to 4.5 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 2.0 per cent to 1.0 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, land fill tax, climate change levy, aggregates levy and customs duties recovered by assessment; and
• late payment of customs duty;

changes from 5.5 per cent to 4.5 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, land fill tax, climate change levy, aggregates levy and excise duties; or
• where there has been undue delay in processing a claim for repayment of excise duty and customs duty.

changes from 2.0 per cent to 1.0 per cent.

Article Added Sunday, 04 January 2009

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