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Changes to Interest on Tax

HM Revenue and Customs have announced changed to the rates of interest charged on late, unpaid or overpaid taxes and National Insurance contributions.  The new rates of interest, which came into force on 6th January 2008 are, according to HMRC, a result of the recent changes to market rates.

Income tax, capital gains tax, national insurance contributions and stamp duty paid late will now be charged at a rate of 7.5 percent, rather than 8.5 percent.

If the same payments have been overpaid, and need to be repaid, this repayment supplement will now be deducted at a rate of 3 percent, down from four percent.

The rates are dependant on dates and the different taxes to which the miscalculation in payment applies, but generally the interest rates have dropped across the board by one percentage point.

The changes will obviously have a 50/50 effect.  In cases where the taxpayer has paid late, or underpaid, they will be charged a lower rate of interest, but conversely, where the taxpayer has overpaid, their reimbursements will gain slightly less interest as they would previously have done. 

These changes may seem like a slight fluctuation based on changes to market rates, but they can also serve a dual purpose.  They can act as a reminder to individuals to ensure that they are paying the correct amount of tax and national insurance contributions, to avoid overly-complicated issues at a later date.

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This article has been provided by UK200Group.

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