3 days Ago By Nicholas Dawson
HM Revenue and Customs (HMRC) is to amend its interest rates for late payments after the base rate set by the Bank of England dropped in the central bank's latest decisions. The bank dropped the base rate from five percent down to 4.75 percent and the HMRC rate will also drop as a result.
The late payment rate will drop from 7.5 percent down to 7.25 percent while the repayment rate will fall from 4 percent down to 3.
75 percent. The new rates imposed by the tax authority will come into force on Monday, 18 November, applying to quarterly instalment payments. HMRC explains on its website how the rates are set: " HMRC interest rates are set in legislation and are linked to the Bank of England base rate.
Late payment interest is currently set at base rate plus 2.5 percent. Repayment interest is set at base rate minus 1 percent, with a lower limit - or ‘minimum floor’ - of 0.
5 percent." The information page also explains the thinking behind how the Government sets the rates. It states: "The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.
"The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay." In a separate query, a taxpayer recently contacted HMRC as they were having issues buying National Insurance (NI) contributions towards their state pension . Reaching out over X, the customer asked: "If I wanted to buy back NI credits and can’t do it online, how would I go about it please? Tried calling the Future Pension Service but just get referred back to the website and cut off.
" The tax group said in its response: "If you wish to make the payment online, you'll need a reference number issuing to you, by contacting an adviser on the helpline." They also sent the taxpayer a link to a page with details about how to get in touch if you have a question regarding National Insurance. But the individual said the problem was that when they logged into their account, adding: "it says I am unable to make payment online".
HMRC further stated that they would need an 18 digit reference number to make the payment online, adding: "You can't make an online payment without the reference num People may want to check now if they have gaps in their NI record worth filling in to increase their state pension , as you can do so over an extended period of tax years. Usually you can only buy contributions up to six tax years ago, but this is currently extended by another 10 years, as far back as the 2006/2007 tax year. The deadline to top up over this extended period is April 2025.
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