Can You Overpay HMRC To Get Interest?

martindow

With interest rates tumbling, would it be possible to make a tax overpaypment to HMRC on which they would pay interest?  I understand that they pay 0.5% - is this correct?  Or perhaps it wouldn't work as the extra cash would just be repayed immediately.

Dazed_and_C0nfused

Yes it is possible but they only pay interest on amounts that have been used to pay tax owed.

So if you paid something in January and then amended your return and the amount owed reduced they would pay you interest on the amount overpaid.

But if you paid the amount due in January now and it just sat on your Self Assessment account until being allocated to the tax payable in January they won't pay interest on that.

RobM99

I like your thinking!!

martindow

Thank you, I suspected there would be a catch with my cunning scheme.  Just looking forward to when all savings accounts follow NS's lead down to 0.01% ...

steampowered

You could also make a normal, conventional investment. The stock markets have historically returned about 7-8% per year - so just open a stocks & shares ISA and invest in a balanced stock market fund. A much better idea if you are saving for the long term.

Sailtheworld

Someone would consider accidentally overpaying HMRC for 0.5%?

It gets ever more desperate.

grumiofoundation

martindow said:

With interest rates tumbling, would it be possible to make a tax overpaypment to HMRC on which they would pay interest?  I understand that they pay 0.5% - is this correct?  Or perhaps it wouldn't work as the extra cash would just be repayed immediately.

Why would you bother when you can get nearly double this rate in a 1 year account?
I am presuming you don't need easy access to this cash because if you do handing it over to HMRC seems a strange choice...

martindow

Thanks for the replies.

My post was facetious, but the way interest rates are going 0.5% might soon seem quite attractive.  It seems to me as if the NS&I rate was propping up the savings market and forcing others to offer half decent rates.  Now that that has been cut, everyone is dropping their rate of interest.