As the Self Assessment deadline approaches, taxpayers are being given a stark warning: pay promptly or face the consequences. From today, the interest rate charged by HMRC for late tax payment of income tax will rise to six percent.
This is more than double the rate charged at the same time last year, and the highest level in more than 14 years.
The deadline to submit a Self Assessment tax return online rolls around every January 31.
However, with the festive season proceeding this, many people will often forget to get their tax affairs in order until the last minute.
The mad dash to file taxes will be a shared experience among millions of Britons.
READ MORE: Rishi Sunak’s plan to cut inflation won’t ‘ease squeeze’
For example, a taxpayer who files their return and owes £30,000 on January 31, 2023, who does not pay the tax and late payment penalty until June 1, 2023, will find their total bill has risen to just over £32,100.
They will be paying just under £300 more interest to HMRC than the same tax debt paid late in 2022 would have cost them.
Those who know they are going to struggle to pay on time are urged to contact HMRC to establish a formal Time to Pay arrangement.
Ms Register added: “This will mean as long as you stick to the instalment payments agreed, the penalty won’t be charged. However, interest will be applied.
“The current high interest rate for late payment can also apply to valid penalties not paid on time.
“So this should provide some extra motivation for people to file and pay their tax promptly this year.”