Business banking interest rates for deposits

Mr_SpeakEasy

I have noted that the interest rate on business bank deposit rates are small compared to those for private individual bank deposits.

However HMRC are currently paying 4% for early payment of tax and will change as interest rates move up or down. 

I have almost doubled the interest return I earn by paying my Corporation Tax early compared to what I can earn from my bank (currently 2.3% for a notice account or 0.9% for an immediate access account) with my business bank account.

You wont receive the interest until after you have submitted your tax return and the tax falls due but its a nice earner from the Revenue and Customs, if you have any spare cash earning a lower interest rate that you are happy to hand over to the tax man! 

If you have the opportunity to pay your tax early take advantage of this rate.

Weave

Mr_SpeakEasy said:

I have almost doubled the interest return I earn by paying my Corporation Tax early compared to what I can earn from my bank (currently 2.3% for a notice account or 0.9% for an immediate access account) with my business bank account.

Useful tip if you can get your tax return done early, thanks. I would however change your business savings provider, banks like Aldermore pay 3.05% easy access at the moment.

Mr_SpeakEasy

I did look into other banks and to get a rate anywhere near 4% required a fix of 12 months or longer. 

I paid the tax 9 months early and the best rate for 9 month fix was 3.5%

If interest rates move there was no change in the rate unlike HMRC who change interest rates immediately. So any uplift in rates you get the benefit and vice versa if they go down.

With the early payment there was no need to complete the tax return, I still havent done that yet, but I made an estimate of how much tax would be due. 

I don’t have the time to monitor banks for rates and go through the account opening process and if you have a debt due that you know you have to pay and you earn interest greater than you can earn from the banks by paying early why not?

Also any tax overpaid is refunded and has earned interest at the rates quoted.

I see this process as HMRC contributing to my tax bill for next year.