A new minimum
interest rate on tax repayments of 0.5% means that in future
interest will still be payable even when the Bank of England base
rate falls below 1.5% HM Revenue & Customs (HMRC)
announced today.
The Government will also be introducing changes to the current
interest rates regime which will deliver greater transparency and
certainty in the way that rates are set and applied. This will
pave the way for the implementation of full interest harmonisation
which was legislated for in this year’s Finance Bill.
Details
The Government announced in Budget 2009 that it would introduce
secondary legislation designed to harmonise interest rates for
those taxes where HMRC currently charge and pay interest. These
regulations came into effect on 22 July 2009 and introduce changes
to the way that HMRC calculates its interest rates.
HMRC will recalculate its rates after the September Monetary
Policy Meeting (MPC) using the new formulae provided in the
regulations. Harmonisation will result in a change to some of
HMRC’s interest rates even if there is no change in the base rate
announced by the MPC.
The harmonised rates will be based around the Bank of England
base rate and will change in response to any changes announced by
the Monetary Policy Committee 13 working days later.
Notes to Editors
1. Interest charged on late payments of tax will be the Bank of
England base rate plus 2.5 and for interest paid on overpayments,
the rate will be the Bank of England base rate minus 1.
2. The new rates and the minimum repayment rate take effect 13
working days after the September meeting of the Bank of England
Monetary Policy Committee.
3. Any change in the interest rates will be announced in a press
release and published on HMRC’s website.
4. The number of formulae used by HMRC to calculate its interest
rates has reduced and it is therefore necessary to recalculate the
rates for the various taxes and duties using the formulae shown in
the regulation.
5. The new rates will come into effect on the date announced and
will apply until there is a change in the base rate and it becomes
necessary for HMRC to recalculate its rates again. The rates
applied for all earlier periods by HMRC will apply as notified.
The new rates will not be retrospective.
Issued by HM Revenue & Customs Press
Office
Press enquiries only please contact:
Contacts:
Madonna Grant
Phone: 020 7147 2331
madonna.grant@hmrc.gsi.gov.uk