HMRC rates are linked to the Bank of England base rate which from 16 December 2021 was increased from 0.1% to 0.25%. This has naturally resulted in an increase in the late payment rate, to 2.75% from 2.6% as of 4 January 2022 for all payments except quarterly instalment payments which increased to 1.25% from 1.1% as of 27 December 2021. Despite this increase in interest for late payments, HMRCs repayment rate for overpayments has stayed the same at 0.5%.
In light of this, we would therefore suggest to our clients when an estate is taxable, where able, that they consider making payments on account to HMRC to mitigate any late repayment interest. This is particularly important for high value estates where the interest increase could result in significant reductions in the value of the estate. Furthermore, by making these payments on account, all funds that may be refunded by HMRC will benefit from interest payments at a rate of 0.5%.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.
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