Self-assessment late tax could now face higher interest rate of 3 percent

Self-assessment tax not paid by 31 January 2022 began to incur interest from 1 February 2022 at a rate of 2.75 percent per annum or part thereof. Following the recent decision by the Bank of England to increase the base rate of interest, HMRC’s late payment interest rate is increasing to 3 percent per annum starting today, 14 February 2022, for corporation tax quarterly instalment payments and 21 February 2022 for all other late tax payments, including self-assessment tax payments. This means that 2020/21 self-assessment tax unpaid by 21 February 2022 will incur a higher interest rate.

11.59pm Monday 31 January 2022 was the deadline to file 2020/21 self-assessment returns to ensure these were not treated as late though, as readers are already aware, HMRC introduced filing and payment easements for 2020/21 after lobbying by this Institute.

Those who could not file their return by 31 January 2022 will not receive the 5 percent late filing penalty if they file online by 28 February 2022. This will not be charged if they either pay their tax in full, or set up a time to pay arrangement, by 1 April 2022. However, interest is still payable from 1 February 2022 as normal.