What are the HMRC interest rates?

The following information will outline the HMRC interest rates for tax paid late. The interest rates vary depending on days, months and years of the late paid tax. Please see our headings to find the specific date your tax was paid late and then the amount overdue.

Interest on late paid tax from 21 November 2017

Tax overpaid
Tax overdue
Income tax, NI, capital gains tax
0.5%
3%
Stamp duty, stamp duty land tax and stamp duty reserve tax
0.5%
3%
Corporation tax – self-assessment (rate after due date)
0.5%
3%
Corporation tax pre-paid (quarterly and early payments)
0.5%
1.5%
Inheritance tax
0.5%
3%
VAT*
0.5%
3%
The VAT interest is only paid where the overpayment arises from either official error or undue delay by HMRC.

Interest on late paid tax from 23 August 2016 – 20 November 2017

Tax overpaid
Tax overdue
Income tax, NI, capital gains tax
0.5%
2.75%
Stamp duty, stamp duty land tax and stamp duty reserve tax
0.5%
2.75%
Corporation tax – self-assessment (rate after due date)
0.5%
2.75%
Corporation tax pre-paid (quarterly and early payments)
0.5%
1.5%
Inheritance tax
0.5%
2.75%
VAT*
0.5%
2.75%
The VAT interest is only paid where the overpayment arises from either official error or undue delay by HMRC.

Interest on late paid tax from 29 September 2009 – 22 August 2016

Tax overpaid
Tax overdue
Income tax, NI, capital gains tax and stamp duties
0.5%
3%
Corporation tax pay and file
0.5%
3%
Corporation tax – self-assessment (rate after due date)
0.5%
3%
Corporation tax pre-paid
0.5%
3%
Corporation tax – quarterly payments
0.5%
1.5%
Inheritance tax
0.5%
3%
VAT*
0.5%
3%
The VAT interest is only paid where the overpayment arises from either official error or undue delay by HMRC.

Official interest rate

For calculation of taxable benefits in kind on cheap rate or interest-free employer loans and employer-provided accommodation.
2016/17
2017/18
2018/19
HMRC official interest rate
3%
2.5%
2.5%
HMRC’s official interest rate is used in the calculation of two benefits in kind, as shown below:
1. Employer-provided cheap or interest free loans
  • Where an employer lends money to an employee or directors in a company and the balance of the loan exceeds £10,000 (£5,000 prior to 6 April 2014) at any time; and interest payable by the employee is zero, or at a rate less than the official rate, a benefit in kind arises equal to the average balance over the tax year, or the term of the loan if that’s shorter, multiplied by the official interest rate. Any interest paid by the employee is then deducted from the result to arrive at the taxable benefit.
  • Loans made to employees of recognised lenders, e.g. banks, on the same terms and conditions as commercial loans made by the employer to members of the public are not counted as beneficial loans even if they are at a preferential rate.
  • HMRC also requires you to still report details of loans to employees or their relatives if they were made as part of salary sacrifice arrangements.
2. Employer-provided accommodation
Where an employer provides an employee with accommodation as a perk, i.e. it’s not a requirement of the job, e.g. as in the case of an on-site caretaker, and the cost of providing it exceeds £75,000, an additional charge is added to the basic charge when calculating the benefit in kind.
The formula for working out the additional charge is: (The cost of providing the accommodation – £75,000) x the official rate of interest.

For more information, we provide a Business Consultation to ensure our clients benefits from tax planning and accounting matters.

For any assistance contact Companies999, we will be happy to help you!

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