HMRC penalties and surcharges are subject to interest charges, as with all other outstanding amounts of tax owed to HMRC.
You should note that if there are still amounts of unpaid tax owed to HMRC, interest will be charged both on the unpaid amounts as well the penalties that have been applied by HMRC. Charges can mount up quickly, so if you have outstanding amounts owed to HMRC you should try and come to an agreement about how to repay those amounts to stop the debt from escalating.
What are the Current Late Payment Interest Rates?
The current late payment interest rates applied to the main taxes and duties (and penalties and surcharges levied in associated with these taxes) that HMRC currently charges is 2.75% from 23 August 2016. The only exception to this is the rate of interest charged on underpaid quarterly instalment payments for Corporation Tax, which is 1.25% as of 15 August 2016.
Which Taxes does the Late Payment Interest Rate Apply to?
The late payment interest rate is charged on the following taxes (and penalties levied against those taxes):
- Income Tax
- National Insurance Contributions
- Capital Gains Tax
- Stamp Duty Land Tax
- Stamp Duty
- Stamp Duty Reserve Tax
- Corporation Tax
- Petroleum Revenue Tax
- Air Passenger Duty
- Insurance Premium Tax
- Environmental Taxes
- Custom Duty
You can refer to the previous late payment interest rates and repayment interest rates in force prior to 23 August 2016 and 29 September 2009 respectively here.
How do I Know How Much Interest to Pay?
HMRC will calculate the interest due on the tax and penalties and communicate this to you in writing. If you’re worried about self-assessment interest and penalties, they have a calculator where you can estimate the penalties and interest you need to pay here.
What if I Don’t Agree with the Penalty?
If you don’t agree with the penalty or think you have mitigating reasons for why the penalty should be waived, you should appeal to HMRC using the form they would have sent you with the notice of the penalty. If you still do not agree with HMRC’s decision, you can request for the decision to be reviewed by an independent officer, or appeal to the Tax Tribunal.
Receiving a penalty from HMRC can be very stressful. The most important thing you can do is be proactive and not ignore the situation – HMRC will continue to apply interest and penalties which can mount up quickly. If you want advice, we can provide an initial consultation free of charge – simply call 08000 746 757 or use the live chat feature on your screen.