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HMRC have announced their latest interest rates charged on late payments and paid on overpayments.

The reduced rates that cover quarterly instalment payments and early payments of corporation tax not due by instalments (for accounting periods ending on or after 1 July 1999) 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.

The rate changes are as follows:

Income tax, NICs, capital gains tax, stamp duties etc.
The rate of interest charged on income tax, NICs, 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 3.5 per cent to 2.5 per cent.

The rate of interest on overpaid income tax, NICs, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax (repayment supplement) remains at 0 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 2.75 per cent to 2 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 3.5 per cent to 2.5 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 1 per cent to 0 per cent.

Corporation tax
The rate of interest charged on underpaid instalment payments of corporation tax changes from 2 per cent to 1.5 per cent. This rate takes effect from 16 March 2009.

The rate of interest on overpaid instalment payments of corporation tax, and on corporation tax paid early (but not due by instalments) changes from 0.75 per cent to 0.25 per cent. This rate takes effect from 16 March 2009.

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 2.75 per cent to 2 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 2.75 per cent to 1.75 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)) remains at 0 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 3.5 per cent to 2.5 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, remains at 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, landfill tax, climate change levy, aggregates levy and customs duties recovered by assessment;
• late payment of customs duty;

changes from 3.5 per cent to 2.5 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;
•  where there has been undue delay in processing a claim for repayment of excise duty and customs duty,

remains at 0 per cent.