HMRC is raising the interest rate on unpaid tax to 4.25% – six times the rate it pays on money it owes
HMRC is raising interest rates on unpaid taxes to a 13-year high of 4.25%, six times the rate paid on money it owes.
This is an increase of 1.5 percentage points since the start of 2022, when its late payment fee was 2.75%.
Experts warn bills could spiral out of control if taxpayers don’t get a handle on unpaid bills.
Seizure of charges: HMRC is raising interest rates on unpaid taxes to a 13-year high of 4.25% – an increase of 1.5% since the start of 2022, when its late payment charges were 2 .75%
It comes after the Bank of England raised the base rate from 1.25% to 1.75% – the biggest jump in 27 years.
HM Revenue & Customs has also increased the rate it pays on refunds – from 0.25% to 0.75%, which is far less generous.
Nimesh Shah, managing director of tax and advisory firm Blick Rothenberg, said: “This sets a worrying trend for taxpayers struggling to pay unpaid taxes, against the backdrop of other rising costs.”
HMRC says: ‘The interest we charge and pay ensures that we don’t encourage people to overpay their tax to get a higher rate of interest than commercially available, and that those who pay their tax late do not gain an unfair financial advantage over those who pay on time. ‘