Penalty interest rate increases for third time this year
HMRC’s late payment interest rate will rise following another increase in the Bank of England’s base rate. When does this take effect and do taxpayers need to take action?
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New HMRC guidance on winter fuel payments
HMRC has released new guidance on the recovery of winter fuel payments. What do you need to know?
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Festive tax breaks for remote workers
You’re familiar with the tax break for Christmas parties but you now have a few remote workers, and the company will need to reimburse their travel and accommodation costs if they attend an event. Which costs count towards the tax-free limit and how can you manage any overspend?
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New process for some exports starting in Northern Ireland
Starting next month, businesses that import goods via Northern Ireland will need to change their processes. What do you need to know?
In line with the increase in the Bank of England base rate, late tax payments will be subject to interest at a rate of 3.25% (currently 3%) per annum from 5 April 2022 (or from 28 March for payments that are made in quarterly instalments). Late payment interest accrues even where a time to pay arrangement has been set up.
This is the third time HMRC has increased late payment interest this year, because the rate is set at 2.5% above base rate. Unfortunately, the repayment interest rate remains 0.5%, being the minimum rate that can be applied. HMRC’s Official Rate of Interest, which is used to calculate the income tax charge on the employee benefit of interest free loans, will also remain unchanged at 2% for the 2022/23 tax year.
Unfortunately, the only way to avoid the increased rate is to ensure all outstanding amounts are paid before 5 April. Where an individual can't do this, try to pay as much as possible to minimise the tax debt liable to the increased rate. In our opinion, the interest rate is likely to rise several times this year, so this makes good sense in any case.
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