Chapter 6 Interest on late paid tax and repayments

Question 1

6.1 Introduction

Answer 1

Interest on late CT runs from the due date of repayment to the actual date of payment. HMRC charge interest at the bank base rate plus 2.5%. repayments of overpaid tax receive repayment interest at an interest rate at the bank base rate minus 1% (minimum rate of 0.5%).

Question 2

6.2 Interest on instalments

Answer 2

For large companies, CT is paid by instalments and paid based on an estimate. The rates of interest that apply to instalments are more generous. Debit interest is charged at base rate plus 1%, credit interest is given at base rate minus 0.25% (minimum rate of 0.5%). The rates apply from the instalment due date until the normal due date for the accounting period (nine months and one day from the end of the accounting period).
Credit interest applies to all companies, not just instalments. Small companies are entitled to credit interest from the date of payment to the normal due date.