August 2023

HMRC increases late payment interest rate

HMRC has increased interest rates with late payment bills charged 7.5% from 11 July, the highest rate since 2001.

The move follows the Bank of England's June increase in the base rate with HMRC also increasing the rate paid on repayments of tax. The Bank increased the base rate to 5% from 4.5% on 22 June, the 13th consecutive rise.

Late payment interest is payable on late tax bills including income tax, national insurance contributions (NICs), Capital Gains Tax (CGT) and corporation tax.

Repayment interest was also increased from the current 3.5% rate to 4%.

HMRC gives £1.8 million a year to charities to help excluded taxpayers

The voluntary and community sector will be able to apply for grants from HMRC to support their work with taxpayers who need extra assistance with their tax affairs.

Eligible organisations need to bid for the funding, worth £1.8 million a year from 2024 until 2027, up from the current annual grant of £1.66 million, through HMRC's voluntary and community sector grant funding programme. Bids can be submitted between 24 July and 21 August 2023, with successful organisations being announced in October, ready for the new funding to start from 1 April 2024.

The programme has been ongoing for over a decade and previous beneficiaries included Citizens Advice Bureaus, TaxAid, Tax Help for Older People, RNIB's Sight Loss Advice Service and Gingerbread.

To be eligible for grant funding from HMRC, an organisation must be a registered charity, voluntary and community sector organisation, social enterprise, mutual or a co-operative.

UK inflation falls as economy shrinks in May

The UK's rate of inflation fell to 7.9% in the year to June while the country's economy shrank in May, according to the latest Consumer Prices Index (CPI) published by the Office for National Statistics (ONS).

The inflation rate is currently at its lowest annual rate since March 2022, the ONS said. Price rises have slowed by more than experts anticipated. According to the ONS, falling fuel prices helped the rate of inflation to drop, and food prices rose less quickly when compared to June 2022.

Core inflation also fell from 7.1% to 6.9%, the data showed.

Meanwhile, the UK economy contracted by 0.1% in May following growth of 0.2% in April, ONS data showed.

Bank of England raises UK interest rates

The UK's interest rate has been raised to 5.25% by the Bank of England as it continues to try and bring inflation under control.

The Bank's Monetary Policy Committee increased the rate by 0.25% from 5% - the 14th increase in a row.

It is a 15-year high for the base rate, which was last at this level in April 2008.