SDLTM85925 - Interest: Introduction
Interest is charged on both unpaid tax and penalties, and interest is also payable by HMRC when tax has been overpaid.
The late payment interest rate encourages prompt payment. It ensures fairness for those who pay their tax on time.
The repayment interest rate compensates taxpayers fairly, when they overpay, for loss of use of their money.
The interest rules introduced by Finance Act 2009 which apply to many other taxes and duties do not yet apply to Stamp Duty Land Tax. Therefore, the relevant legislation is at:
FA03/S87Interest on unpaid tax
FA03/S87AInterest on unpaid tax (cases involving RIFs)
FA03/S88Interest on penalties
FA03/S89Interest on repayment of tax overpaid etc.
Payment
Interest is payable without deduction of tax and is not allowable as a deduction in computing income, or profits or gains for tax purposes.
Rate
The rate of interest is fixed by statutory instrument and is the rate applicable under FA89/S178.
The current rate can be found at Interest rates for late and early payments - GOV.UK (www.gov.uk).
Bankruptcy and liquidation
Interest under the Taxes Acts ceases to run when a purchaser becomes bankrupt, or an insolvent company goes into liquidation. Any interest for the bankruptcy or liquidation period will, if there is a surplus, be paid under the bankruptcy legislation or the Companies Acts.