HMRC hikes interest rate charged on unpaid tax to 4.25% – six times the rate it pays on money it owes
HMRC is hiking interest rates on unpaid tax to a 13-year high of 4.25 per cent— six times the rate paid on money it owes.
This is a 1.5 percentage point increase since the start of 2022, when its late-payment fee was 2.75 per cent.
Experts warn bills could spiral out of control if taxpayers do not get on top of outstanding bills.
Fee grab: HMRC is hiking interest rates on unpaid tax to a 13-year high of 4.25% -a 1.5% increase since the start of 2022, when its late payment fee was 2.75%
It comes after the Bank of England raised the base rate from 1.25 per cent to 1.75 per cent — the largest single jump in 27 years.
HM Revenue & Customs also raised the rate it pays on repayments — up 0.25 per cent to 0.75 per cent, which is far less generous.
Nimesh Shah, chief executive of tax and advisory firm Blick Rothenberg, says: ‘It sets a worrying trend for taxpayers who are struggling to pay outstanding taxes, against the backdrop of other rising costs.’
HMRC says: ‘The interest we charge and pay ensures we do not encourage people to overpay their tax to secure a higher interest rate than available commercially, and that those paying their tax late do not get an unfair financial advantage over those paying on time.’