HMRC cuts late payment interest rates

HMRC has announced changes to interest rates for late and repayment of Income Tax and National Insurance contributions: Late payment interest rate: 8.00% Repayment interest rate: 3.00% How are the rates calculated? Late payment interest = Bank of England base rate + 4% (from 6 April 2025; previously +2.5%). Repayment interest = Bank of England base rate – 1%, with a minimum floor of 0.5%. HMRC explains the difference: “The rates align with international tax practice and reflect typical commercial interest on loans and deposits.” Key takeaway for businesses & taxpayers: Late payments are now significantly more costly. Make sure your tax deadlines are met to avoid unnecessary interest charges. More than accountants – your growth partner. 📍 353 High Street North, London, E12 6PQ 📧 info@taxca.co.uk 🌐 www.taxca.co.uk 📞 020 3369 7867 #TAXCA #HMRC #TaxUpdate #BusinessTips #UKTax

HMRC has resumed its programme allowing direct recovery of money from debtors’ bank accounts. The Direct Recovery of Debts (DRD) policy, which was paused during the Covid-19 pandemic, has restarted in a ‘test and learn’ phase’, the tax authority has confirmed. DRD targets individuals and businesses who can afford to pay their debts but deliberately choose not to, HMRC said. This power enables HMRC to compel banks and building societies to transfer funds directly from a debtor’s account. It applies to debts of £1,000 or more, with safeguards against undue hardship and for vulnerable customers. Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt. Safeguards include only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC’s attempts to make contact. The safeguards also include leaving a minimum of £5,000 in the debtor’s accounts to ensure that sufficient money is available to pay wages, mortgages or essential business or household expenses. HMRC said, "The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so." #accountant #HMRC

𝙊𝙡𝙙 𝙫𝙨. 𝙉𝙚𝙬 𝘽𝙖𝙙 𝘿𝙚𝙗𝙩 𝙍𝙪𝙡𝙚𝙨: 𝙒𝙝𝙖𝙩'𝙨 𝘾𝙝𝙖𝙣𝙜𝙞𝙣𝙜? Another update from the New Tax Act 2025! If you're a business owner, you need to know about the changes to bad debt rules. Here's a comparison between the old and new provisions: 👡 Old Provision: - Businesses had more flexibility in claiming tax deductions for bad debts. - Documentation requirements were not as strict. - This led to some inconsistencies and potential abuse. 👡 New Provision: - Businesses now need to provide more proof to claim tax deductions for bad debts. For instance: 1. Invoice or contract 2. Proof of delivery 3. Bill or statement 4. Letters or emails sent 5. Efforts to collect debt 6. Write-off record 7. Proof customer can't pay (if the customer is bankrupt) - Debts will be classified into different stages based on how long they've been outstanding. - The tax rules for bad debts are becoming clearer. 👠 Why is the new provision better? - Increased transparency: Clearer guidelines will help businesses understand what they can claim. - Improved accountability: Stricter documentation requirements will reduce potential abuse. - Better risk management: Businesses will be more proactive in managing their finances. 🩴What should businesses do? - Make sure you're following the new rules to avoid any issues. - Keep good records of your debts and payments. - Stay on top of your finances to avoid bad debts. Share this information with others! #tamunonemitekenah Business and Corporate lawyer

💷 Thinking of taking a loan from your company? On the surface, it can look like a smart move – quick access to funds with no bank forms, no refusals, and no interest charged. But HMRC’s rules make things much more complicated. 👉 Fail to repay within nine months and one day, and your company could face a 33.75% tax charge. 👉 Repay and borrow again? The 30-day ‘bed and breakfast’ rule could stop it counting. 👉 And even small loans have conditions and hidden traps. We’ve explained the rules, the risks, and the exemptions in our latest blog – so you can borrow with confidence and avoid an HMRC headache. 🔗 https://lnkd.in/en8_6ijK

💷 HMRC TO RESUME TAKING TAX OWED BY DEBTORS DIRECTLY FROM BANK ACCOUNTS 💷 HMRC has resumed its programme allowing direct recovery of money from debtors' bank accounts. The Direct Recovery of Debts (DRD) policy, which was paused during the Covid-19 pandemic, has restarted in a 'test and learn' phase', the tax authority has confirmed. DRD targets individuals and businesses who can afford to pay their debts but deliberately choose not to, HMRC said. This power enables HMRC to compel banks and building societies to transfer funds directly from a debtor's account. It applies to debts of £1,000 or more, with safeguards against undue hardship and for vulnerable customers. Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt. Safeguards include only taking action against those who have established debts, have passed the timetable for appeals and have repeatedly ignored HMRC's attempts to make contact. The safeguards also include leaving a minimum of £5,000 in the debtor's accounts to ensure that sufficient money is available to pay wages, mortgages or essential business or household expenses. HMRC said: 'The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.' #TaxNews #HMRC #accountants #SMEAccountingExperts #SupportingSmallBusinessesUK #GrantJones

💷 HMRC TO RESUME TAKING TAX OWED BY DEBTORS DIRECTLY FROM BANK ACCOUNTS 💷 HMRC has resumed its programme allowing direct recovery of money from debtors' bank accounts. The Direct Recovery of Debts (DRD) policy, which was paused during the Covid-19 pandemic, has restarted in a 'test and learn' phase', the tax authority has confirmed. DRD targets individuals and businesses who can afford to pay their debts but deliberately choose not to, HMRC said. This power enables HMRC to compel banks and building societies to transfer funds directly from a debtor's account. It applies to debts of £1,000 or more, with safeguards against undue hardship and for vulnerable customers. Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt. Safeguards include only taking action against those who have established debts, have passed the timetable for appeals and have repeatedly ignored HMRC's attempts to make contact. The safeguards also include leaving a minimum of £5,000 in the debtor's accounts to ensure that sufficient money is available to pay wages, mortgages or essential business or household expenses. HMRC said: 'The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.' #TaxNews #HMRC #accountants #SMEAccountingExperts #SupportingSmallBusinessesUK #GrantJones

💭 HMRC’s not just relying on luck anymore Ever heard of HMRC Connect? It’s the system that quietly pulls together data from all over — banks, employers, property records, even online platforms — and looks for gaps between what people say they earn and what the data suggests. It’s not there to catch people out for the sake of it. The aim is fairness — making sure everyone pays what they should. But it does mean that if you’ve got side income, rental income, or digital sales, it’s more important than ever to make sure everything’s declared properly. For most people, it’s just a reminder that these days, everything leaves a trail — and the easiest way to sleep well at night is to stay on top of your records and returns. If you’re unsure what needs declaring or how to put things right, it’s always better to talk before HMRC does. #HMRC #Tax #SmallBusiness #Accountants #TaxAdvice #WardownAccountancy

Rising interest rates: Could they create a #VAT trap for solicitors?   After years of ultra-low rates, we’ve now returned to what might be considered as ‘normal’ levels of #interest. While this may be good news for some, it has also drawn HMRC’s attention, with potential consequences for VAT recovery on overheads, particularly within the legal sector.   In our latest article, I explore:   Why bank interest can create challenges for VAT recovery. #HMRC’s current approach and the role of ‘incidental’ financial transactions. The VAT recovery risks linked to interest income from client funds. Practical action points to reduce your exposure and strengthen your VAT position.   For many firms, the sums involved may be small, but where meaningful interest income is earned, the risk of HMRC scrutiny increases.   Read the full article here: https://lnkd.in/e5wHNbH2   If you’d like tailored advice on partial exemption, or guidance on how to manage the VAT risks linked to interest income, contact our expert team @Gerald Edelman today.

HM Revenue & Customs has resumed its direct recovery of debts ("DRD") scheme, which was understandably paused since the pandemic. The scheme allows #HMRC to recover unpaid tax directly from bank accounts if tax payers owe at least £1,000 and ignore payment requests. At least £5,000 must remain in the tax payer’s accounts after recovery to cover essential expenses and DRD covers all tax payers. #HMRC and the HM Treasury are investing c.£630m in debt recovery due to the significant overdue debt managed by HMRC. DRD targets those with the means to pay but who refuse, not those in genuine hardship, but this remains to be seen. Kroll’s #Tax #Arrears #Solutions team uses a hands-on approach to help companies facing financial uncertainties. We work with management, shareholders and their key stakeholders to review liquidity, working capital structures and devise solutions to improve cashflow. The team have an extremely high success rate for agreeing #TimetoPay arrangements with #HMRC and most importantly a proven track record in helping saving #businesses and #jobs. Feel free to get in touch to discuss DRD and all matters relating to HMRC.

HMRC will be watching your savings as Savings accounts are set for more scrutiny. From April 2027, banks will be required to ask both new and existing customers with savings accounts for their National Insurance numbers to make it easier for HMRC to bill taxpayers who breach their personal savings allowance. The requirements, which will be introduced in legislation next year, will see more workers pay savings tax directly from their pay packets without submitting a self-assessment. Tax inspectors have already started raiding the bank accounts of those who choose not to pay their bills, HM Revenue and Customs (HMRC) has admitted. The taxman can claim money directly from the accounts of debtors who owe more than £1,000 under “direct recovery powers”, which were first introduced in 2015 but paused during the pandemic.