Interest on late paid tax

Written by yasiradnan94
10 May 2022

All late paid tax now carries interest at 3%. Where the tax has been outstanding for more than six months a 5% surcharge on the outstanding amount may also apply.

Surcharge rates of up to 15% can apply for VAT paid just one day late. If you can only pay some of your tax bills it often makes sense to prioritise the VAT but we can help you decide.

A first step when faced with a tax bill you cannot pay should be to contact HMRC and make an arrangement to spread the bill over a number of months. This is called a Time to Pay agreement and can be done online if you owe HMRC less than £30,000. Where the debt is greater than £30,000 or you need more than a year to pay, you need to speak to an HMRC officer and provide more information. We can help you with that.

If you have income tax still outstanding from 2019-20 but you are due a tax repayment for 2020-21 you might assume that the repayment would be off-set against the tax due and prevent any further interest running. Unfortunately this is not how the tax rules work. The tax repayment for 2020-21 is generally off-set against the outstanding tax, but only with effect from the final deadline for submitting the tax return: 31 January 2022 for the 2020-21 tax return.

MTD simplification

A dramatic simplification of the MTD processes to be introduced – no EOPS; cumulative submissions each quarter; and restrictions.

Cash basis to replace accruals

Cash basis to replace accruals for the self-employed as standard tax reporting method for 2024-25 (first year of tax year accounting). From April 2024, as part of a move to simplify calculation of taxable profits for Making Tax Digital, all self-employed taxpayers and...

Company car charging at home

HMRC has updated its Employment Income Manual to bring the guidance on charging electric company cars at home in line with the legislation.

Related Posts

Holiday Pay Changes

Holiday Pay Changes

If you engage part time workers, or staff who work irregular hours, on permanent contracts you need to be aware of new rules.

MTD simplification

MTD simplification

A dramatic simplification of the MTD processes to be introduced – no EOPS; cumulative submissions each quarter; and restrictions.

We use contact information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For information, check out our Privacy Policy.