{"id":4819,"date":"2022-08-18T11:34:26","date_gmt":"2022-08-18T11:34:26","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=4819"},"modified":"2022-08-18T11:34:31","modified_gmt":"2022-08-18T11:34:31","slug":"interest-rate-hike-puts-pressure-on-taxpayers-behind-on-payments","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/interest-rate-hike-puts-pressure-on-taxpayers-behind-on-payments\/","title":{"rendered":"Interest rate hike puts pressure on taxpayers behind on payments"},"content":{"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 repayments of tax.<\/p>\n<p><!--more--><\/p>\n<p>This news comes as costs continue to rise across the board.<\/p>\n<p>HMRC interest rates are linked to the Bank of England\u2019s base rate. The two rates are detailed below:<\/p>\n<ul>\n<li>Late payment interest &#8211; base rate plus 2.5 per cent<\/li>\n<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>\n<\/ul>\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<p>At the same time, this rate (not seen since January 2009) has many taxpayers worried about their outstanding tax bills.<\/p>\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<p>Since the start of 2022, HMRC\u2019s interest rate has increased by 1.5 percentage points.<\/p>\n<p>In real terms, this is the equivalent of an extra \u00a3225 per annum on a \u00a315,000 liability.<\/p>\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<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<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<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<p>Taxpayers are wise to settle as much of their outstanding tax liability as they can afford.<\/p>\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 repayments of tax.<\/p>\n","protected":false},"author":2,"featured_media":4821,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,6,41,7],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4819"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=4819"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4819\/revisions"}],"predecessor-version":[{"id":4820,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4819\/revisions\/4820"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/4821"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=4819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=4819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=4819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}