Permanent increase to penalty interest rates
The new tax year saw a change to the way interest on late paid taxes is calculated. What’s changed and what are the new charges?
Prior to 2025/26, interest was charged at the Bank of England base rate plus 2.5% on most underpaid taxes. In a push for unpaid tax bills to be settled, it was announced at the 2024 Autumn Budget that this would change to the base rate plus 4% from 6 April 2025. The government says the rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time.
From 6 April 2025 the following rates apply:
- Late corporation tax paid quarterly - 7%
- Late payment interest on other taxes - 8.5%
There is no corresponding change to the way repayment interest rates are calculated, i.e. the base rate minus 1%, with a lower limit of 0.5%.
Related Topics
-
Founders' relief: a closer look
The new founders' relief sounds remarkably generous, offering a 10% capital gains tax rate on up to £10 million of gains from selling shares from April 2027. However, a closer look at the proposed qualifying conditions suggests that relatively few business owners will benefit. Why might the relief be so difficult to claim?
-
Employment Intermediaries quarterly return due
-
Founders' relief: a closer look
The Budget's new Founders' Relief sounds remarkably generous, offering a 10% capital gains tax rate on up to £10 million of gains from selling shares from April 2027. However, a closer look at the proposed qualifying conditions suggests that relatively few business owners will benefit. Why might the relief be so difficult to claim?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.