Interest from Paying HMRC Early

Published on: 07/03/2024

Most people are aware that HMRC will charge you for paying tax late.  It’s not always called the same thing – interest, penalty, surcharge – and it’s different depending upon the tax it relates to, but that’s the essence of what happens.

However, if you are a limited company, you can be paid interest by HMRC for paying your corporation tax early.

Corporation tax is usually payable 9 months and 1 day after the year end, so for a 31st December year end, corporation tax is due by 1st October.  If you pay it early, then HMRC will pay you interest on your payment between the date you paid and the due date.

HMRC currently pays interest at base rate less 1%.  At the time of writing, base rate is 5.25%, so the interest they pay is at 4.25%.

Depending upon the amount of interest, HMRC will either physically repay the interest after the due date, or carry it forward on your account to be deducted from the next year’s corporation tax bill.

More details here.

N. Goddard

7.3.24

Please note: posts were written at a specific time and reflect the rules in place at that time, which may no longer be relevant. Furthermore, the posts are generic in nature. We cannot accept any responsibility for any losses in respect of actions taken on the strength of this generic advice. We would advise you to seek up to date advice which is relevant to your circumstances.
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