Using HMRC repayment interest as a tax-free savings option, good idea?

Janin1992

Has anyone (ab)used HMRC repayment interest as a way to earn tax-free interest on savings? They currently offer 3.75% tax-free interest, which seems quite appealing, especially for higher-rate taxpayers, if your ISA allowance is already used up.

Interest rate: https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates

Confirmation, that the interest is a tax free money: https://community.hmrc.gov.uk/customerforums/pt/3355b340-44c3-ee11-a81c-6045bd0c2f4c

jimjames

Not sure I can really see the point when you can get 5% on savings elsewhere, you still get £500 interest allowance as higher rate taxpayer. I certainly wouldn't want to send thousands to HMRC and then have to wait to find out if/when I can get that money back. If you have no tax owing I'm not sure how HMRC would react receiving a payment of £20,000, it might get sent straight back. Do you really need so much cash? If so you have premium bonds and gilts that are both suitable for HR taxpayers. 

MDMD

HMRC only pay interest on amounts “due” (e.g. a payment on account they asked for which wasn’t due when a return is filed).

https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf306

” This provides for the repayment interest start date to be the later of the date on which the amount was paid to HMRC and (where applicable) the date on which the payment became due and payable to HMRC.”

Anything just paid without being due attracts 0% interest