File late tax returns this weekend ahead of interest rate rise
The interest rate applied to outstanding balances on late tax returns will be increased on Monday, following the Bank of England’s base rate rise. If you’ve yet to file or pay your outstanding balance, do it this weekend if you can.
More than two million people missed the 31 January deadline to file their 2020/21 self-assessment tax return
While HMRC waived the late filing penalty for anyone submitting their return by 28 February, and has given customers until 1 April to pay tax or to set up payments to avoid a late payment penalty, the interest on outstanding balances is accruing.
Since 1 February, interest of 2.75% has been applied.
But following on from this month’s Bank of England base rate rise from 0.25% to 0.5%, HMRC has confirmed the interest applied to outstanding tax return payments will also rise.
This is because HMRC interest rates are linked to the Bank of England base rate.
It will increase from 2.75% to 3% as of Monday 21 February for non-quarterly instalment payments (such as the late tax return outstanding balance).
For quarterly instalment payments (such as for corporation tax), the 3% interest applied from 14 February.
HMRC confirms repayment interest rates remain unchanged (0.5% from September 2009).