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HMRC announces harmonised interest rates

HM Revenue and Customs (HMRC) has announced the new interest rates that will be charged for and paid on late and overpaid taxes.

The tax authority indicated in July that interest rates would be harmonised across all forms of tax.

Other changes include introducing a minimum lower rate for repayment interest and new methods for calculating the interest either owed or due based on the Bank of England official rate.

All the present changes in rates take effect from 29 September except those for corporation tax quarterly instalment payments which apply as from 21 September.

For income tax, NICs, capital gains tax and stamp duties, the new rate for late payments is 3 per cent (up from 2.5 per cent) and for over payments is 0.5 per cent (up from 0 per cent).

For VAT, excise duties, environmental taxes, insurance premium tax and custom duty, the new rate for late payments is 3 per cent (up from 2.5 per cent) and for over payments is 0.5 per cent (up from 0 per cent).

For corporation tax quarterly instalment payments, the new rate for late payments remains at 1.5 per cent and for over payments is 0.5 per cent (up from 0.25 per cent).

For corporation tax for account periods ending on or after 1 October 1993, the new rate for late payments is 3 per cent (up from 1.75 per cent) and for over payments is 0.5 per cent (up from 0 per cent).

For corporation tax (other than underpaid instalments) for account periods ending on or after 1 July 1999, the new rate for late payments is 3 per cent (up from 2.5 per cent) and for over payments is 0.5 per cent (up from 0 per cent).

For income tax on company payments that became due on or after 14 October 1999, the new rate for late payments is 3 per cent (up from 2.5 per cent) and for over payments is 0.5 per cent.

For inheritance tax, capital transfer tax and estate duty, the new rate for late payments is 3 per cent (up from 0 per cent) and for over payments is 0.5 per cent (up from 0 per cent).

For advance corporation tax, corporation tax on or before 30 September 1993, stamp duty reserve tax (to 30 September 1999), petroleum revenue taxes and income tax on company payments due on or before 13 October 1999, the new rate for late payments is 3 per cent (up from 2 per cent) and for over payments is 0.5 per cent (down from 2 per cent).