Interest on Tax Overdue

Computation of Interest on Tax Overdue

Section 129 Finance Act 2002 introduced a daily rate of interest on tax overdue and applied that daily rate from 1 September 2002. Prior to that interest on tax overdue was charged on a monthly basis.

Some tax practitioners had expressed doubts about the Revenue approach to computing interest relating to tax arrears. Revenue, having considered the legislation fully, has recently confirmed to practitioners, that interest on tax overdue due should be calculated at the following rates:

• A rate of 1.25% for each month or part of a month up to, and including, March 1998
• A rate of 1% for each month or part of month of delay between April 1998 and August 2002 inclusive, and
• A rate of 0.0322% for each day or part of a day of delay from 1 September 2002.