Current HMRC interest rates
The current late payment and repayment interest rates applied to the main taxes and duties that HMRC currently charges and pays interest on are:
- late payment interest rate — 3.75% from 5 July 2022
- repayment interest rate — 0.5% from 29 September 2009
HMRC interest rates are set in legislation being linked to the Bank of England base rate. There are 2 rates:
- late payment interest, set at base rate plus 2.5% (the current base rate is 1.25%)
- repayment interest, set at base rate minus 1%, with a lower limit of 0.5% (known as the ‘minimum floor’) – until the base rate exceeds 1.5% this rate will remain unchanged and has been since September 2009
Do you own residential property through a limited company, a partnership with a company member or a collective investment scheme?
If you haven’t registered to use HMRCs online service, you have until the 1 April 2022 to register. The ATED period is 1 April 2022 to 31 March 2023, where you own a residential property on 1 April 2022 that is contained with a limited company, returns for that period must be filed by 30 April 2022. You can begin populating an online ATED return for 2022 to 2023 from around mid-March, but can’t submit it before 1 April.
This applies to residential properties (dwellings) within the company with a taxable value of over £500k. The taxable value is its value at 1 April 2022, or if acquired after, its cost. This value applies to each individual property and not the value of the portfolio as a whole.
If the value of the property is within 10% of one of the value bands you can request a pre-banding check from HMRC to get a determination as to whether the property will be subject to the charge.
There are exemptions and reliefs. Exemptions mean you won’t need to register the property and so there is no requirement to complete a return. Reliefs need to be applied for so, even if a full relief applies and no charge will be payable, you still need to register and complete a return.
HMRC will not waive late filing penalties or extend the 31 January deadline, but it will accept pandemic related disruptions and agent delays as a reasonable excuse and will also extend the period to appeal a penalty.
Remember the budget? It was only three weeks ago but feels like a lifetime! We’ll be updating the rates and allowances on the website as soon as possible with adjustments for Coronavirus provisions.
Guidance has just been published with answers to many of the questions surrounding this scheme. There will not be a portal open for claims until late April so you can’t access it yet.
The Government website has been updated and provides answers to questions raised such as what constitutes wages. This is particularly important for those paid irregular amounts and commissions.
The Chancellor announced a VAT payments deferral on 20 March to support businesses with cash flow during the COVID-19 pandemic.
This means that all businesses with a UK VAT registration have the option to defer VAT payments due between 20 March and 30 June.
You therefore have until 31 March 2021 to pay any VAT deferred as a result of this announcement.
You do not need to inform HMRC if you wish to defer payment. You can opt in to the deferral simply by not making VAT payments due in this period. If you pay by Direct Debit you should cancel this with your bank. You should do so in sufficient time so that HMRC does not attempt to automatically collect on receipt of their VAT return.
Should you wish, you can continue to make payments as normal during the deferral period. HMRC will also continue to pay repayment claims as normal. You must continue to submit VAT returns as normal.
Below are extracts from HMRC’s website. Please be particularly aware of the warnings regarding scams. HMRC never contact you directly by phone or email.
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
Who can apply
You can apply if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
How much you’ll get
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for 3 months.
We’ll pay the grant directly into your bank account, in one instalment.
How to apply
You cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.
After you’ve applied
Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.
If you claim tax credits you’ll need to include the grant in your claim as income.
Other help you can get
The government is also providing the following additional help for the self-employed:
- deferral of Self Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
- grants for businesses that pay little or no business rates
- increased amounts of Universal Credit
- Business Interruption Loan Scheme
If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.
There will be more questions than answers and we’ll do our best to keep abreast of them to be up to speed on what is available and how to claim.
Welfare benefits of up to £1,800 per month. 80% of average earnings as declared over the last 3 years – up to £2,500 per month. Open to businesses with business profits up to £50K.
This scheme looks like it is to be adminstered by HMRC and will be up and running by the beginning of June – hopefully!