Last Thursday, the Bank of England increased it’s base rate to 3%, it’s highest level for 14 years. This has implications on any tax you pay to HMRC, either later or earlier than the due date. Any tax paid late is charged to interest at a rate of base plus 2.5%.
Therefore, the new interest rate charged by HMRC on late tax is now 5.5%. Conversely, any tax paid early attracts interest from HMRC at a rate of base minus 1%. Therefore, the new interest rate you will receive from HMRC on tax paid early is now 2%. If you have the money and you are earning less than 2% interest in your business current account then it may make sense to pay your tax early and receive the 2% interest.