Early payment of Capital Gains tax

Dithering_Dad

Apologies if this has already been asked on this forum - I did a quick search but didn't find a thread that covered my question...

My accountant has created my final accounts and submitted them to the Revenue once I gave them a 'once over' to check & approve them. I now have my accountant's calculation of my corporation tax bill (£16k) and the tax money is currently sat in my 30 day notice 'high interest' account, waiting to be paid to the revenue when it comes due in 9 months time.

Given that the BoE interest rate is so low, and subsequently my high interest account is anything but 'high', does anyone know if it would be financially worthwhile to submit my Corp Tax 9 months early in order to receive the interest from the government?

I guess my real questions are basically:

1. If you pay Corp Tax early, do you always receive interest on the tax paid?
2. Does anyone know what this tax rate is?

Thanks in advance!

DD.

Dithering_Dad

Update:

My 'high interest' account is the Asset30 account with Cater Allen Private bank is currently paying 0.3% on all deposits between £10k and £50k.

After a bit of googling I have found a document that states the Revenue is paying (from 15th December 2008) 1.75% on early payment of corp tax. If this is correct then I would stand to gain 1.45% if I pay the Corp Tax early.

On a £16k early payment over 9 months, this would provide my company with a net gain of about £174, plus with the added advantage of not having the temptation to dip into the tax money if times get hard.

Does anyone know if this is correct, and if so, why isn't everyone doing it?

BoGoF

Not sure about corporation tax but certainly for Income Tax (Self Assessment) no interest will be paid on tax paid early.

BoGoF

Also per the HMRC site the rate has dropped to 0.5% from 6 January 2009.

johnllew

Dithering_Dad wrote: »

If this is correct then I would stand to gain 1.45% if I pay the Corp Tax early.

On a £16k early payment over 9 months, this would provide my company with a net gain of £2213.29,

Don't know how you get £2213 but I think you're at least a decimal point out.

I make £16k X 1.45% X 9/12 = £174 less CT at whatever rate the company pays.

Would it not be better to keep it in a higher paying account in the meantime? Standard Life are paying 3.91% gross to the 20th April 2009 and 2.31% gross thereafter (variable): http://www.standardlife.co.uk/content/savings/business/business_index.html

Dithering_Dad

I used an online compound interest calculator, obviously something went amiss! I thought it seems a huge amount! lol.

£174 is still a quite good return for simply paying early. It's illegal for me to withdraw the Corp Tax money from my company bank account, but I could have a look for a business account with a 30 day notice account with a much better rate.

Dithering_Dad

BoGoF wrote: »

Also per the HMRC site the rate has dropped to 0.5% from 6 January 2009.

Do you have a link to this, I had a poke about in the HRMC sit and couldn't find this figure.

johnllew

Dithering_Dad wrote: »

£174 is still a quite good return for simply paying early.

But you won't get that; as BoGof says the rates HMRC pay have dropped from the 6th Jan. The StanLife rates I've quoted are for business accounts and are correct as at 6th Jan.

johnllew

Dithering_Dad wrote: »

Do you have a link to this, I had a poke about in the HRMC sit and couldn't find this figure.

http://www.hmrc.gov.uk/rates/interest-repayments.htm

Dithering_Dad

I don't think that link refers to overpayment of corp tax. Here is where i got the 1.75% figure:

http://www.hmrc.gov.uk/rates/interest-ctsa.htm#paid

BoGoF

Did you not say 1.25% earlier and have edited it ?....hence thereason I posted my link as the 1.25% rate has fallen to 0.5%