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Reviewed by
Chris Andersen
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Reviewed by Chris Andersen

Chris became an Insolvency Practitioner in 2014 and is currently regulated by the IPA.

He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.

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28th November 2022

If you can’t pay your corporation tax, HMRC late payment interest for begins on the day the tax should have been paid and ends on the day the unpaid tax is settled.

We cover the full interest rates below.

Contents
  1. What are HMRC’s Late Payment Interest Rates for Corporation Tax?
    1. Is Late Payment Interest Tax Deductible?
    2. What if You’re Paying your Corporation Tax in Instalments?
    3. Can you Object to Paying Interest on your Corporation Tax?

What are HMRC’s Late Payment Interest Rates for Corporation Tax?

Interest penalty is charged automatically but only on the debt itself, not the interest that follows. For a full list of the latest interest rates you can visit HMRC’s page here.

  • Late payment interest rate – 2.75% from 23 August 2016
  • Repayment interest rate – 0.5% from 29 September 2009

Is Late Payment Interest Tax Deductible?

This interest penalty is tax deductible for corporation tax purposes, meaning it can be included as an expense in company accounts for the tax year in question.

What if You’re Paying your Corporation Tax in Instalments?

For larger businesses making a profit of more than 1.5 million, corporation tax will customarily be paid in instalments. The means of payment, in this case, makes no difference to a company’s liability for late payments on unpaid tax. Interest on any late instalment payment penalties applies from each of the instalment payment due dates though it’s worth noting that it isn’t calculated until after the accounting period (nine months and one day after the end of the accounting period.) Also, one of the following two things should have occurred:

  1. The submission of a company tax return
  2. If a return was not submitted on time, HMRC would have made a determination on tax liability.

There are two Interest Rates for late Payment on Corporation Tax Instalments:

  1. The lower rate (aka debit interest) runs from each of the instalment payment due dates to the normal due date (nine months and one day from the end of the accounting period)
  2. The higher rate runs after the normal due date.

Can you Object to Paying Interest on your Corporation Tax?

Appealing against an interest charge penalty isn’t possible. However, if you feel there has been a mistake in the calculation, then you are free to make a legitimate objection against your tax return.

For free confidential advice on tax problems such as not being able to pay VAT, late payment of PAYE or corporation tax please contact us at your earliest convenience.