If you missed the self-assessment tax return deadline, you’re not alone—over 1.1 million people did. However, a recent change in the Bank of England’s base interest rate means HMRC’s late payment interest rates are set to decrease. Here’s what you need to know.
Lower Late Payment Interest Rates
The Bank of England has reduced the base rate from 4.75% to 4.5%. Since HMRC calculates late payment interest as the base rate plus 2.5%, the new rate for overdue tax payments will drop from 7.25% to 7%, effective from February 17, 2024.
How This Affects You
If you owe tax to HMRC and haven’t paid yet, the reduced interest rate means slightly lower charges on outstanding amounts. However, penalties still apply:
£100 fixed penalty if your return is up to three months late.
Additional daily penalties and higher charges if your return remains unpaid beyond this period.
Late payment interest will continue to accrue until the full amount is settled.
Act Now to Avoid Further Charges
Although the late payment interest rate is decreasing, the penalties remain in place. If you have outstanding tax, it’s advisable to settle it as soon as possible to minimize costs.
Need assistance with your tax affairs? Our accounting experts can help you navigate your self-assessment obligations and avoid unnecessary penalties. Contact us today to ensure you stay compliant and avoid further financial strain.