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.
The following table provides an explanation of the terms used in the interest guidance.
|Balancing payment||A payment of income tax that is required when the final tax liability for the tax year is more than the total of the payments on account, and tax deducted at source, that was made for that year.|
|Compound interest||Interest that is calculated on the amount outstanding, including any interest that has already been charged.|
|Due and payable||The date when an amount becomes ‘due and payable’ is the date by which an amount must be paid (FA09/S104(2)).|
|Late payment interest||Interest payable to HMRC under section 101 FA 2009.|
|Income tax deducted at source||Is a reference to|
- income tax deducted (or treated as deducted) from any income, or treated as paid on any income, in respect of that year, and
- amounts which, in respect of that year, are tax credits to which section 397(1) or 397A(2) of ITTOIA 2005 applies,
but does not include a reference to amounts which, in that year, are deducted at source under PAYE regulations in respect of previous years.
| | ITSA return | A return made under
- Section 8 TMA 1970 (personal return),
- Section 8A TMA 1970 (trustee’s return), or
- Section 12AA TMA 1970 (partnership return).
| | Late payment interest end date | The date when late payment interest is calculated to. This is the date when payment is made.
| | Late payment interest start date | The date when late payment interest is calculated from. See CH140200.
| | Machine Games Duty return | A return due under Regulations made under paragraph 18 of Schedule 24 to FA 2012.
| | Non-business day | Has the meaning as in section 92 of the Bills of Exchange Act 1882. “Non-business days” are
- Saturday, Sunday, Good Friday, Christmas Day,
- a bank holiday under Banking and Financial Dealings Act 1971,
- a day appointed by Royal proclamation as a public fast or thanksgiving day, and
- a day declared by an order under section 2 of the Banking and Financial Dealings Act 1971 to be a non-business day.
Any other day is a business day.
| | Overpayment | Overpayment can occur where the taxpayer
- received an amount from HMRC which they are not entitled to and have to repay - subject to late payment interest
paid too much tax to HMRC and is entitled to a refund - subject to repayment interest.
| | Over-repayment | The amount that HMRC pays to a person in excess of the amount that should have been repaid to that person.
| | Payments on account | A term used in ITSA where a taxpayer makes two payments in a year towards the expected tax liability for that year.
| | Person | For ITSA and BPT, a person includes
- an individual,
- a company,
- a partner,
- an individual or organisation acting in the capacity of a personal representative,
- a trustee, and
a taxable company for bank payroll tax.
| | ‘qualifying charge to tax’ | A qualifying charge to tax is any amount of tax charged on a person (whether alone or together with other persons) by or by virtue of any assessment for or relating to a period where income tax or capital gains tax has been paid for a chargeable period.
| | Repayment interest | Interest payable by HMRC under section 102 FA 2009.
| | Repayment interest end date | The date when repayment interest is calculated to. This is the date when the amount is repaid to the person, paid to another person, or set-off against that person’s or another person’s liability.
| | Repayment interest start date | The date when repayment interest is calculated from.
For repayment of amounts paid to HMRC the repayment interest start date is the later of
- the date when the amount was originally paid to HMRC, and
- the date the payment became due and payable.
For amounts becoming overpaid because of a return or claim, the repayment interest start date is the later of the date the return
- was required to be filed, and
- when the return was actually filed or claim made.
| | Simple interest | Interest that is calculated on an amount outstanding and not including any amount of interest that has already been charged or accrued. Not compound interest.
| | Special provisions | Rules exist in legislation that apply only to certain taxes or in particular circumstances. They affect the amount on which interest is charged, or the start date.
| | ‘under or by virtue of an enactment’ | See CH140240
| | Underpayment | Where the taxpayer has not paid, by the due date, the full amount of tax that was due.