Everybody is aware that interest rates have risen almost month on month and are now the highest rates for many years.
This has an impact on taxation too.
HMRC have announced that from 11th July, any tax paid late will attract an interest charge of 7.5%. this is relatively cheap for an unsecured loan but many taxpayers will not wish to pay this additional interest on their HMRC liabilities.
On the other hand, HMRC will pay 4% from 11th July 2023 on tax repayments. This is going to be a better rate than most people can get from any financial institution and therefore, if you are aware of your tax liability and have sufficient funds, it may be a good idea to pay your corporation tax liability well ahead of the due date in order to exploit this excellent return.
Curiously, for employees (and especially directors), who have overdrawn loan accounts with their companies, the official rate of beneficial loan interest remains at 2.25%.
Finally, the House of Parliament debated on Monday whether to authorise an increase in the statutory mileage rate which has been at 45p per mile since 2012, notwithstanding the fact that the price of petrol has varied between £1 and £2 per litre during that time.
Unfortunately, the Members of Parliament decided to leave the rate still at 45p. We believe this is an opportunity lost. MPs say they will keep the approved Mileage Allowance Payment under review yet they have not changed it for 11 years!