HMRC pushes up late payment charges for landlords ...

Any landlord hit with late payment surcharges from HM Revenue & Customs will now face even higher charges.

As a result of recent base rate rises initiated by the Bank of England, HMRC has hiked its late payment charges for landlords and all other taxpayers.

These apply from August 14 (next Monday) for quarterly instalment payments, and from August 22 for non-quartlery payments.

HMRC interest rates are set in legislation and are linked to the Bank of England base rate. Late payment interest is set at base rate plus 2.5 per cent - so now comes in at a cool 7.75 per cent, following the Bank’s move to take base rate to 5.25 per cent last week.

Repayment interest (paid by HMRC when a taxpayer overpays) is substantially less - this is set at base rate minus 1.0 per cent with a lower limit or so-called ‘minimum floor’ of 0.5 per cent.

A statement from HMRC says: “The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits. The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay.”

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Ellie Edwards
09 August 2023 08:29 AM

Generally, terms in rental agreements have to be abided by and 2.5% above base rate might be acceptable.

In the Welsh legislation, terms which would be unfair under the Consumers Right Act 2015 are prohibited.

Henry S
09 August 2023 11:20 AM

Interesting thought Tricia.

When new to Self Assessment and in a hurry, not wanting to pay a late penalty, I overpaid my tax.
A few months later got a refund with interest added.

Hadn't thought of it as a way of short-term saving. No need to set up a new savings account either :-)

Unless they pay a lower rate on overpayments.