Rates of interest on tax

On 5th July 2007 bank rate increased from 5.5 per cent to 5.75 per cent. This affects the rates of interest on unpaid tax and overpaid tax from two dates as follows:

 
From 16th July 2007 the rate on unpaid corporation tax due by instalments increased from 6.5 per cent to 6.75 per cent, and the rate on overpaid corporation tax due by instalments increased from 5.25 per cent to 5.5 per cent. This is only eight weeks after the last increase.
 
From 6th August 2007 rates on other taxes go up more than one quarter per cent because whereas 5.5 per cent was rounded down to 5 per cent, 5.75 per cent is rounded up to 6 per cent. This is because the formulae which determine these interest rates are based on ‘RR’, is the average of the base lending rates rounded up or down to the nearest whole number, one half being rounded down. The increases are thus as follows:
 
  • From 7.5 per cent to 8.5 per cent on unpaid income tax, capital gains tax, National Insurance contributions (Classes 1, 1A, 1B and 4), stamp duty, stamp duty reserve tax and stamp duty land tax.
  • From 4 per cent to 5 per cent on inheritance tax payable or receivable.
  • From 7.5 per cent to 8.5 per cent on unpaid corporation tax not due by instalments.
  • From 4 per cent to 5 per cent on overpaid corporation tax due by instalments.
  • From 7.5 per cent to 8.5 per cent for value added tax, air passenger duty, excise duties, insurance premium tax. Landfill tax, customs duty, climate change levy and aggregates levy.
  • From 4 per cent to 5 per cent on overpaid indirect taxes.
 
The official rate of interest for beneficial loans at 6.25 per cent since 6th April 2007 is unchanged; reg 5 of SI 1989/1297 as amended by SI 2007/684.

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