New corporation tax interest rates set

Interest changes to corporation taxes, announced by HM Treasury (HMT) today, have mirrored the recent Bank of England interest rate cut.

The adjustments will affect early payments of corporation tax and quarterly installment payments for accountancy periods finishing on or after July 1st, 1999 and will take effect from April 21st, 2008.

Now, the rate of interest that will be charged on underpaid installments of corporation tax will be six per cent - a cut of 0.25 per cent.

Similarly, interest on overpaid instalment payments and on tax paid early will also drop 0.25 per cent, from five per cent to 4.75 per cent.

Both figures have been calculated to reflect the recent economic slowdown and the current average base lending rate of five per cent.

In February HMT announced it had changed its introductory notes package for new companies to simplify the process of setting up taxation records.