New interest rates come into force

Two new statutory instruments relating to interest rates came into force on 31 August 2010.    The first is relevant to almost all taxpayers and specifies the rate iof interest chargeable on the late payment of taxes and dutues and on repayments due from HMRC. In respect of interest on the late payment of monies to HMRC, the rate is calculated by reference to the Bank of England base rate plus 2.5%. In respect of interest payable by HMRC, the rate is calculated as the higher of 0.5% per annum or 1% less than the Bank of England base rate. The second statutory instrument applies the new interest regime to Bank Payroll Tax.   These two changes are part of HMRC’s agenda to standardise interest rates across all late paid taxes and duties in the UK.