HMRC warns new 7.75 per cent tax charge is coming 'this weekend'

HMRC says tax must be paid by January 31s or taxpayers will receive increased interest charges and penalties, in a major blow amid the Cost of Living crisis.
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Interest for not paying HMRC on time is now 7.75%, taxpayers have been warned. HMRC says tax must be paid by January 31s or taxpayers will receive increased interest charges and penalties, in a major blow amid the Cost of Living crisis.

Leading audit, tax and business advisory firm, Blick Rothenberg, is raising awareness over the chances. Chris Boulet, a Tax Partner at the firm, said: “If any tax due by 31 January 2025 is not paid in time, HMRC will charge interest. This is currently at a rate of 7.75% per annum, from the due date to the date of payment. In addition, a 5% penalty will be charged if the 2023/24 balancing payment is not paid within 30 days of the due date, with an additional 5% penalty charged if the tax remains outstanding after 6 months and 12 months.

“Penalties can also rack up quickly and it’s important that taxpayers file their returns and pay their tax by the deadline or as soon as possible afterwards. In previous years, interest may not have been that much of a concern. However, the interest charged by HMRC has been steadily rising to the current 7.75%, almost three times higher than in February 2022 when it was only 2.75%.

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“This high rate of interest can quickly become a painful additional cost. At the very least, taxpayers should consider making an estimated payment by 31 January to reduce interest charges, even if they cannot file their completed return on time.

“But what happens if you miss the deadline for their 2023/24 Self-Assessment Tax Return and files late? Firstly, if your tax return is filed after midnight on 31 January a £100 late filing penalty will be charged regardless of whether any tax is due. If the tax return is still outstanding after 3 months (30 April 2025) £10 daily penalties will start to be charged, up to a maximum of £900.

“If your tax return remains outstanding after 6 months, a tax geared penalty will be charged at a rate of £300, or 5% of your overall tax liability, if that is higher. If your return is over 12 months late, another £300 (or 5% of the overall tax liability if greater) penalty will be charged."