September 2023 / United Kingdom

September 18 2023

UK Treasury Sets Interest Rate for Late Payment of Economic Crime Levy

The UK Treasury has made and published The Finance Act 2009, Sections 101 and 102 (Economic Crime (Anti-Money Laundering) Levy) (Appointed Day) Order SI 2023/997 using its powers under sections 104(3) and 103(4) of the Finance Act 2009 (FA 2009).

The order states that the interest regime in sections 101 and 102 of (including Schedules 53 and 54) the FA 2009 will come into force from 30 September 2023. The first payment of liabilities under the economic crime levy become payable on 30 September 2023.

Interest will be added to any payment of the economic crime levy paid after the due date. The current applicable rates regarding late payment interest and repayment interest are set at the UK bank base rate plus 2.5%. The base rate is 5.25% so interest will apply at 7.75% a year.

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September 1 2023

HMRC late payment interest rates have been revised after Bank of England increases base rate

The Bank of England Monetary Policy Committee announced an increase to the Bank of England base rate from 5.00% to 5.25%

HMRC interest rates are linked to the Bank of England base rate.

Because the base rate has changed, HMRC interest rates for late payment and repayment have been increased.

How HMRC interest rates are set

HMRC interest rates are set in legislation and are linked to the Bank of England base rate.

Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1% with a lower limit, or ‘minimum floor’, of 0.5%.

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.

Source: GOV.uk

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