Taxpayers charged 7% interest on late payments. Those owed a refund receive just 3.5% interest from HMRC.
With the Bank of England having risen interest rates for the 13th consecutive month and millions of self-employed workers struggling to make ends meet, HMRC has been criticised for charging 600,000 taxpayers twice as much in interest as it pays to those it owes refunds.
Since 31st May, HMRC has charged 7% interest on late payments but only pays 3.5% interest on tax refunds – a 100% difference. As a result, HMRC has been slammed for “profiteering from self-employed workers at the worst possible time” by IWORK, the body that champions independent working.
Prior to this, HMRC charged 6.75% interest and paid just 3.25% on money owed to taxpayers in refunds. Interest charged by HMRC to taxpayers in the past 12 months has doubled, from 3.5% to 7%.
At the start of the year, it was reported that around 600,000 taxpayers were due to miss the self-assessment deadline of 31st January, meaning they faced possible late payment fees. HMRC has also closed its self-assessment taxpayers’ telephone line from 12th June until 4th September 2023 – a move for which the tax office has been widely criticised.
Julia Kermode, founder of IWORK, commented: “HMRC is profiteering from self-employed workers at the worst possible time. Hundreds of thousands of people are being hit with needlessly high interest on late payments. All the while, HMRC gives itself an easy ride, paying half of the amount of interest that it charges. It’s unbelievably unfair.
“When it comes to supporting the self-employed, the government talk a good game, but action speaks louder than words. Inflicting financial pain on small business owners is reckless, short-sighted and counterproductive.
“Rather than doing everything to help independent workers cope with soaring mortgage payments and the rising cost of living, these underhand tactics do the total opposite.”
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HMRC profiteering from 600,000 self-employed at worst possible time