{"id":19697,"date":"2022-08-23T14:45:38","date_gmt":"2022-08-23T14:45:38","guid":{"rendered":"https:\/\/www.moorethompson.co.uk\/blogs\/?p=19697"},"modified":"2022-08-23T14:45:40","modified_gmt":"2022-08-23T14:45:40","slug":"interest-rate-hike-puts-pressure-on-taxpayers-behind-on-payments","status":"publish","type":"post","link":"https:\/\/www.moorethompson.co.uk\/blogs\/interest-rate-hike-puts-pressure-on-taxpayers-behind-on-payments\/","title":{"rendered":"Interest rate hike puts pressure on taxpayers behind on payments"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.moorethompson.co.uk\/blogs\/wp-content\/uploads\/2022\/08\/M.T.-Blog-Graphic-01.08.2022-4-1024x576.png\" alt=\"\" class=\"wp-image-19699\" srcset=\"https:\/\/www.moorethompson.co.uk\/blogs\/wp-content\/uploads\/2022\/08\/M.T.-Blog-Graphic-01.08.2022-4-1024x576.png 1024w, https:\/\/www.moorethompson.co.uk\/blogs\/wp-content\/uploads\/2022\/08\/M.T.-Blog-Graphic-01.08.2022-4-300x169.png 300w, https:\/\/www.moorethompson.co.uk\/blogs\/wp-content\/uploads\/2022\/08\/M.T.-Blog-Graphic-01.08.2022-4-768x432.png 768w, https:\/\/www.moorethompson.co.uk\/blogs\/wp-content\/uploads\/2022\/08\/M.T.-Blog-Graphic-01.08.2022-4.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>In light of the recent increase in the Bank of England\u2019s base rate, HM Revenue &amp; Customs (HMRC) has announced a rise in interest on both late paid tax and repayments of tax.<\/p>\n\n\n\n<!--more-->\n\n\n\n<p>This news comes as costs continue to rise across the board.<\/p>\n\n\n\n<p>HMRC interest rates are linked to the Bank of England\u2019s base rate. The two rates are detailed below:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Late payment interest &#8211; base rate plus 2.5 per cent<\/li><li>Repayment interest &#8211; base rate minus 1 per cent (there is a lower limit of 0.5 per cent also known as the minimum floor)<\/li><\/ul>\n\n\n\n<p>Because HMRC\u2019s interest rates are set in legislation, the rise in interest owed on late tax bills to 4.25 per cent on 23 August is unavoidable.<\/p>\n\n\n\n<p>At the same time, this rate (not seen since January 2009) has many taxpayers worried about their outstanding tax bills.<\/p>\n\n\n\n<p>When you put this increase in the context of rising living costs and a looming recession, there is all the more reason to be concerned.<\/p>\n\n\n\n<p>Since the start of 2022, HMRC\u2019s interest rate has increased by 1.5 percentage points. &nbsp;<\/p>\n\n\n\n<p>In real terms, this is the equivalent of an extra \u00a3225 per annum on a \u00a315,000 liability.<\/p>\n\n\n\n<p>Considering the rise to 4.25 per cent due on 23 August, on the same liability you would go through an almost \u00a3650 per annum interest hike.<\/p>\n\n\n\n<p>If the Bank of England increases the base rate to 2.5 per cent at the end of 2022, HMRC will have to follow suit and increase their interest rates as well.<\/p>\n\n\n\n<p>The key takeaway is that you should exercise a great deal of caution if you are considering a TTP arrangement with HMRC.<\/p>\n\n\n\n<p>Despite this arrangement being heavily publicised at the start of the COVID-19 pandemic, those who have this arrangement could end up paying more than anticipated.<\/p>\n\n\n\n<p>Taxpayers are wise to settle as much of their outstanding tax liability as they can afford.<\/p>\n\n\n\n<p><strong>If you need advice on managing your tax liabilities, contact us today.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In light of the recent increase in the Bank of England\u2019s base rate, HM Revenue &amp; Customs (HMRC) has announced a rise in interest on both late paid tax and&hellip; <a href=\"https:\/\/www.moorethompson.co.uk\/blogs\/interest-rate-hike-puts-pressure-on-taxpayers-behind-on-payments\/\"><span class=\"meta-nav\">Read more&hellip;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26,33,3,30],"tags":[],"class_list":["post-19697","post","type-post","status-publish","format-standard","hentry","category-blog","category-business-blog","category-tax","category-tax-blog"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - 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