Lateness is Now More Costly
As a consequence of the rising levels of inflation in parts of the world, including in the UK, the Bank of England is gradually pushing the base rate up in the effort to slow the rate of inflation; depending on circumstances, this could further increase during next year.
Following the Bank of England’s announcement on 3 November to raise the base interest rate to 3%, HMRC’s late payment interest rates are also expected to increase in line with the announcement.
The rate of interest for the late payment of taxes is calculated as the base rate plus 2.5%. Hence, this rate will rise to 5.50% from 22 November 2022.
In comparison, this is now double the amount we had at the start of the year (2.75%). Naturally, if not already, there should be more emphasis on making payments to HMRC on time or at least an estimated payment on account – as otherwise, missing or delaying payments will now be twice as costly.
Furthermore, for clients under the corporation tax quarterly instalment regime (QIPs), the interest on underpaid instalments of corporation tax liabilities is calculated as base rate plus 1%. Thus, from 14 November 2022, this will increase to 4%.
For any enquiries on how this could affect you or your business, please get in touch with the Elman Wall Xeinadin Group Tax team by email at TaxTeam@elmanwall.co.uk or by phone at 0207 600 5667.