HMRC is hiking interest rates on unpaid tax to a 13-year high of 4.25 per cent— six times the rate paid on money it owes.
This is a 1.5 percentage point increase since the start of 2022, when its late-payment fee was 2.75 per cent.
Experts warn bills could spiral out of control if taxpayers do not get on top of outstanding bills.
Fee grab: HMRC is hiking interest rates on unpaid tax to a 13-year high of 4.25% -a 1.5% increase since the start of 2022, when its late payment fee was 2.75%
It comes after the Bank of England raised the base rate from 1.25 per cent to 1.75 per cent — the largest single jump in 27 years.
HM Revenue & Customs also raised the rate it pays on repayments — up 0.25 per cent to 0.75 per cent, which is far less generous.
Nimesh Shah, chief executive of tax and advisory firm Blick Rothenberg, says: ‘It sets a worrying trend for taxpayers who are struggling to pay outstanding taxes, against the backdrop of other rising costs.’
HMRC says: ‘The interest we charge and pay ensures we do not encourage people to overpay their tax to secure a higher interest rate than available commercially, and that those paying their tax late do not get an unfair financial advantage over those paying on time.’
This post first appeared on Dailymail.co.uk