Will HMRC Pay Me Interest?

Shylock_249

Moving to Self Assessment for the first time in Apr this year, backdated to the FY 24/25, having submitted the 24/25 return I immediately paid the POA for FY 25/26. I then submitted my 25/26 return.

HMRC are now showing that I owe them £1937.20 to be paid in July 26 and they owe me £2840.20 which is shown as pending in Repayments.

Just as small matter of interest, Google AI suggests that amounts shown in Repayments might stay there for some time, and might even remain there after the July deadline for me to pay the £1937.20 and I might be fined if I don’t pay HMRC even though they are still showing the £2840.20 in Repayments.

Financially I won’t have a problem paying the £1937.20 (if I have to).

Will HMRC pay me interest on money held in Pending Repayments? Afterall they would charge me interest if I don’t pay. I think the Pending Repayment appeared on my account on Thursday 30 April.

Why don’t they just pay me the £903?

eskbanker

If the repayment relates to tax erroneously deducted via PAYE during 2024/25 then I think they should pay interest from 31 January 2026, but am no expert in interpretation of these regulations so happy to be corrected!

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

etienneg

Would the interest be paid at 2.75% pa?

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81988957#Comment_81988957

Yes:

https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates#current-late-payment-and-repayment-interest-rates

fuzzzzy

Interesting. I usually do my tax return very late in the year so I can cross check my savings interest figures with HMRC. I was considering doing it early this year before my second payment on account in July because I suspect the second payment might take me over whatever tax I owe due to payments also made through PAYE. I had assumed that if that was the case then the second payment would be cancelled and I would just have to pay the balance owed. It seems that is maybe not the case?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81989039#Comment_81989039

POA are always easier to explain with some figures really. But a key thing to remember is they are always within 1p of each other, so you would never pay say £1,000 as the first POA and then have just the second POA cancelled.

And they are never increased, from the original amounts, however large the liability actually is for the tax year the POA relate to.

Diaz09

You're right to be concerned about timing - HMRC can be painfully slow with repayments even when they clearly owe you money. The frustrating thing is they'll still expect their payment by the July deadline regardless of whether they've sorted your repayment out. My experience is that repayments can take 4-6 weeks minimum, sometimes longer if there are any queries.

One thing worth double-checking is whether any of that repayment relates to overpaid tax on savings interest, as the rules changed recently and it's easy to get caught out. The personal savings allowance can be tricky to calculate properly when you're new to self assessment. You might want to verify your figures against the current thresholds - https://moneywiseuk.co.uk/tax-on-savings-interest-uk/ has the full details if you want to check.

sheramber

If you paid £4000 in January but liability was £3500 then both poa would be reduced to £1750 and any money overpaid in January would be available to cover payment due in July.

2nd poa not cancelled but both poa reduced.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81990002#Comment_81990002

I'd suggest that it would be better not to keep directing people towards that Moneywise UK site - it looks suspiciously like AI slop and there are errors in each of the pieces you've linked to, so it would be better to stick to more credible and reliable sources, of which there are many…

jem16

https://forums.moneysavingexpert.com/discussion/comment/81989372#Comment_81989372

The net effect of my POA for 2025/26 has more or less cancelled my 2nd payment on account in July.

Tax return for 2024/25 showed expected liability for 2025/26 as £2,589.06 so 2 POAs for £1,294.53. First one paid in January 2026.

Tax return for 2025/26 was £2,176.37 owing so £412.69 less.

They have reduced my 2nd POA to £206.35 and said that I'm £206.35 in credit so that will be used to pay the now amended POA of £206.35 leaving £881.83. So I have nothing to pay in July.

As I was told on the HMRC chat, that means I owe less than £1k so will be collected in January 2027.

fuzzzzy

https://forums.moneysavingexpert.com/discussion/comment/81990125#Comment_81990125

Yes, it states you pay 40% tax, and only get a £500 personal savings allowance on incomes over £37700 which is clearly wrong.