Interest on Self Assessment Tax if Paid Early

daveshoelace

I've trawled through the (not very user friendly) HMRC website and also MSE but cant find a link anywhere.

If I pay my self assessment tax early, rather than keep it in a savings account, does anyone know what interest rate the HMRC will use on my payment? Just wondering whether I may as well pay all my tax straight in there at the end of the tax year.

Mikeyorks

No interest paid on early payments, I'm afraid. That's why you won't find it.

But if the sum paid subsequently becomes repayable then, perversely, any repayment supplement due will be from the date of payment - rather than from when it was due.

daveshoelace

Mikeyorks wrote: »

No interest paid on early payments, I'm afraid. That's why you won't find it.

But if the sum paid subsequently becomes repayable then, perversely, any repayment supplement due will be from the date of payment - rather than from when it was due.

Are you sure? I specifically remember Martin Lewis saying on one of his Channel 5 shows that if you are self employed, its not the worst idea to pay one third of your earnings directly to the HMRC because they will accrue interest just as they would a bank account.

no-oneknowsme

daveshoelace wrote: »

Are you sure?

I have never heard of this myself and when you think about it , it does sound a bit "way out" .

I personally cant see HMRC paying you interest because you made a payment to them early !

As to your quote above ^^^ if anyone knows the answer to your question i would put money on it being Mikeyorks.......

Mikeyorks

daveshoelace wrote: »

Are you sure?

I'm positive. The concept of HMRC paying 'mirror interest' raises it's head from time to time .... and Treasury stamps on it.

Other than Corporation Tax (where HMRC do pay early payment interest in certain circumstances) the only mechanism I'm aware of where HMRC will pay (meagre) interest is if you buy Tax Deposit Certificates. The problem being is that no interest is paid on Certificates less than £100,000. Which means they don't sell like hot cakes!

http://www.hmrc.gov.uk/payinghmrc/cert-tax-deposit.htm

SA provides (from recently) that you can make regular payments in advance via Direct Debit. You can plough through the detail from this link but you won't find anything on added interest :-

http://www.hmrc.gov.uk/payinghmrc/selfassessment.htm#3


(if you make 'payments on account' .... then you are effectively paying in advance? I don't see SA Statements these days ...... but I guarantee your POA1 in Jan and the POA2 in July don't have added interest when they're brought into play the following Jan?)

tyllwyd

HMRC paid me some interest once, when my self-employed earnings went down and I'd paid too much in payments on account.

Tarasam

They did used to pay interest but no longer, havent for approx a year or more. Had to come in line with the banks.

Mikeyorks

tyllwyd wrote: »

HMRC paid me some interest once, when my self-employed earnings went down and I'd paid too much in payments on account.

But that is where you had a refund (or a set off - for SA) .... and it was made (set off) after 31st Jan following the tax year. In similar vein I had a PAYE refund for 08-09 recently - which also had an interest supplement added to it.
But you don't get anything on advance payments ..... unless they subsequently become refundable either in whole or in part.

kellyshay wrote:

They did used to pay interest but no longer, havent for approx a year or more.

...... again, that is repayment supplement. It was 0% for the period 27/1/09 to 28/09/09 ........ but has been 0.5% since that date.

HMRC have never offered interest purely in respect of advance payments ...... other than for elements of Corporation Tax.

jason.parker.86

Interest is paid, currently set at 0%

suso

jason.parker.86 wrote: »

Interest is paid, currently set at 0%

not true - interest on repayments (called repayment supplement) is currently at 0.5 % and has been since september 2009

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

interest on late payment of tax is 3%

interest is paid and charged on tax that is overpaid or underpaid on Jan 31st after the end of the tax year.

Interest is charged on Payments on Account from their due date. (31/1 or 31/7)

climberup

If you are set us as a limited company and you pay your Corporation Tax early, HMRC will pay you interest.