HMRC Lowers Late Payment Interest Rates
Following the Bank of England’s base rate cut to 4.5%, HMRC has reduced its late payment interest rate to 7% and repayment interest rate to 3.5% from 25 February. Corporation tax interest rates have also been adjusted. However, from April 2025, HMRC will raise the late payment surcharge to 4% above the base rate, targeting tax avoidance and late payments.
Inheritance Tax Changes for Pensions from 2027
From April 2027, unused pension pots will be included in an individual’s estate for inheritance tax (IHT) purposes. This could lead to increased costs and delays in probate. Experts suggest reviewing pension arrangements to ensure they remain tax-efficient.
Bank of England Cuts Interest Rates to 4.5%
The Bank of England has lowered interest rates to their lowest level since May 2023. While this offers relief to businesses, concerns remain over rising costs, including higher National Insurance contributions and wage increases. Inflation is expected to rise to 3.7% this year, limiting further rate cuts.
Government AI Expansion Requires Better Collaboration
The Government is increasing its use of AI in public services. HMRC is testing AI chatbots but has reassured taxpayers that human oversight and data protection remain priorities. A Treasury Committee inquiry into AI use in banking and finance is also underway, with submissions due by 17 March.
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