HMRC Interest calcs

DullGreyGuy

Trying to help a friend but struggling a little... 

In January 2024 when filing their Self Assessment they'd messed up and had failed to save money to pay their tax bill. They agreed a repayment plan with HMRC of circa £750 a month with a slightly higher payment in December as the final payment. Obv interest was added with was BoE + whatever. As we all know interest rates were cut in the year.  The repayment was intended to cover both the true up of the year and both the payments on account (Jan/Jul). 

They made all the payments on time, collected by DD by HMRC, and did/paid their Jan 2025 mid January inc the payment on account. 

Looking at their online account now it's showing they owe circa £100 in interest which is showing as being over three years off account inc the 2024/2025. They tried speaking to HMRC who focused on the 23/24 year as it makes up most of it and states that its because the payment on account was below what actually was required. They couldn't provide anything to explain it nor say how much was offset by the overpayments due to the drop in interest rates. 

I haven't seen her wife's details but allegedly hers was similar, but notably bigger numbers in terms of both repayments and the outstanding interests. 

Hoenir

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

DullGreyGuy

Hoenir said:

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

But presumably when you agree a payment plan with them they are including the interest in the amount required to pay? They warned it could move as its BoE rate plus so given the rate went down why is there outstanding interest? There should be a rebate for the excess interest by normal maths.

Dazed_and_C0nfused

DullGreyGuy said:

Hoenir said:

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

But presumably when you agree a payment plan with them they are including the interest in the amount required to pay? They warned it could move as its BoE rate plus so given the rate went down why is there outstanding interest? There should be a rebate for the excess interest by normal maths.

Your logic makes sense but I think you probably need to see the details of what was originally agreed and what, and when, payments were actually made.

Could a late payment penalty (surcharge) have been added if the repayment plan arrangement wasn't strictly adhered to?

Hoenir

DullGreyGuy said:

Hoenir said:

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

But presumably when you agree a payment plan with them they are including the interest in the amount required to pay? They warned it could move as its BoE rate plus so given the rate went down why is there outstanding interest? There should be a rebate for the excess interest by normal maths.

You'd need to do the maths. Depending on the sums involved a £100 could quickly accrue. 

DullGreyGuy

Dazed_and_C0nfused said:

DullGreyGuy said:

Hoenir said:

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

But presumably when you agree a payment plan with them they are including the interest in the amount required to pay? They warned it could move as its BoE rate plus so given the rate went down why is there outstanding interest? There should be a rebate for the excess interest by normal maths.

Your logic makes sense but I think you probably need to see the details of what was originally agreed and what, and when, payments were actually made.

Could a late payment penalty (surcharge) have been added if the repayment plan arrangement wasn't strictly adhered to?

The payments were taken by DD so totally in the control of HMRC. None bounced or had any other problem so if they were "late" it is because HMRC requested them late but it appears the agreement was to be on the 1st of the month and all were unless a weekend in which case first business day as standard for DDs

Their online HMRC account shows no penalties 

Hoenir said:

DullGreyGuy said:

Hoenir said:

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

But presumably when you agree a payment plan with them they are including the interest in the amount required to pay? They warned it could move as its BoE rate plus so given the rate went down why is there outstanding interest? There should be a rebate for the excess interest by normal maths.

You'd need to do the maths. Depending on the sums involved a £100 could quickly accrue. 

This is the thing, I cannot do the math because I've never heard of additional interest if you pay the payment of account on time but it turns out the payment on account was smaller than what your actual tax bill was when you submitted the in the following January 

mybestattempt

I would suggest making a formal objection to the interest charge (there is no statutory right of appeal against interest) and ask HMRC to provide a detailed computation of the interest charge.

TheSpectator

DullGreyGuy said:

Dazed_and_C0nfused said:

DullGreyGuy said:

Hoenir said:

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

But presumably when you agree a payment plan with them they are including the interest in the amount required to pay? They warned it could move as its BoE rate plus so given the rate went down why is there outstanding interest? There should be a rebate for the excess interest by normal maths.

Your logic makes sense but I think you probably need to see the details of what was originally agreed and what, and when, payments were actually made.

Could a late payment penalty (surcharge) have been added if the repayment plan arrangement wasn't strictly adhered to?

The payments were taken by DD so totally in the control of HMRC. None bounced or had any other problem so if they were "late" it is because HMRC requested them late but it appears the agreement was to be on the 1st of the month and all were unless a weekend in which case first business day as standard for DDs

Their online HMRC account shows no penalties 

Hoenir said:

DullGreyGuy said:

Hoenir said:

From	Late payment %
25 February 2025	7.00
26 November 2024	7.25
20 August 2024	7.50
22 August 2023	7.75

Fairly hefty rates of interest on late paid tax. 

But presumably when you agree a payment plan with them they are including the interest in the amount required to pay? They warned it could move as its BoE rate plus so given the rate went down why is there outstanding interest? There should be a rebate for the excess interest by normal maths.

You'd need to do the maths. Depending on the sums involved a £100 could quickly accrue. 

This is the thing, I cannot do the math because I've never heard of additional interest if you pay the payment of account on time but it turns out the payment on account was smaller than what your actual tax bill was when you submitted the in the following January 

If the payments on account were too low then that suggests an incorrect claim to reduce them was made at some point?

I would doubt very much the interest now being sought is incorrect but ask for a calculation.

Hoenir

mybestattempt said:

I would suggest making a formal objection to the interest charge (there is no statutory right of appeal against interest) and ask HMRC to provide a detailed computation of the interest charge.

Pointless making a formal objection if you haven't calculated the figures first yourself. Even on a rough basis easy enough to calculate the approximate amount of interest due. HMRC's computer system is unlikely to be wrong. If it were would affect millons of people. 

sheramber

Did they have payments on account 31 Jan 2023 and 31 July 2023?

Did they pay them?

 Did they ask to reduce them?

What was the balancing payment due 31 Jan 24


What were the payments on account 31 Jan 24 and 31 July 24?

How much in total was the time to pay agreement for?

How much did they agree to pay each month exactly?

When was the first payment made?

DullGreyGuy

sheramber said:

1. Did they have payments on account 31 Jan 2023 and 31 July 2023?
2. Did they pay them?
3.  Did they ask to reduce them?
4. What was the balancing payment due 31 Jan 24
5. What were the payments on account 31 Jan 24 and 31 July 24?
6. How much in total was the time to pay agreement for?
7. How much did they agree to pay each month exactly?
8. When was the first payment made?
   

1. No
2. n/a
3. No
4. 5,647
5. 1,600 each
6. 8,847
7. dont have exact, was just under £740/month other than payment taken 1st Jan which was just under £995
8. 1 Feb 2024