CH145060 - Interest: Late payment interest: special provisions: effect of interest on reliefs for income tax and capital gains tax : relief by discharge - example

You must check whether, and from which date, the FA 2009 interest rules apply to the tax or duty you are dealing with. See CH140160 for full details.

Harriet files her 2013-14 ITSA return and is required to make a balancing payment of £5,000 on 31 January 2015. Harriet doesn’t make the balancing payment until 1 October 2015. Late payment interest on £5,000 runs from 31 January 2015 until 1 October 2015.

However, on 15 September 2015 Harriet claims relief relating to losses for 2014-15, to be calculated by reference to 2013-14. The amount of the relief is £2,000, and it is given effect by discharging part of her unpaid balancing payment of £5,000 for 2013-14.

The special provision means that late payment interest is charged on £2,000 of the balancing payment from the late payment interest start date of 31 January 2015 to 15 September 2015 when Harriet made the loss relief claim. The balance of £3,000 carries late payment interest from the late payment interest start date of 31 January 2015 until the payment date of 1 October 2015.

FA09/SCH53/PARA15