[UPDATED TO REFLECT BASE INCREASE ON 3 AUGUST 2023]
As we have just passed the 31st July, the date when second payments on account towards your 2022/23 tax liabilities are due (if required) it is worth noting that HMRC now charge 7.75% interest on late payments.
This is because late payment interest charges track the Bank of England base rate (currently 5.25%), plus 2.5%.
We therefore recommend that all payments are made on time and if your payments on account were reduced for any reason we recommend that you calculate and file your final self-assessment tax return as soon as possible, as if reduced excessively you will be charged interest from the normal payment on account dates.
Depending on the size of your tax liability it has therefore become very expensive to pay taxes late.
If however you have overpaid your self-assessment taxes then you will be paid a repayment supplement of 4.25%, but this is only calculated from 31st January following the tax year the repayment is for. The repayment supplement is not taxable in the UK however.
Late payment interest is charged in addition to any other late payment penalties and surcharges, so please also bear that in mind.
If you require assistance with any aspect of your UK self-assessment tax affairs, please do not hesitate to contact us.