Interest on Early Personal Tax Payments

Hi All, Quick question re interest on early tax payments, I'm aware of the current rate on such payments being 4.25% from HMRC's site, but what I can't find is how and when this would be applied? If I pay for sake of argument £1,000 of tax a month early, presumably the interest earned on this from HMRC is £1,000 x (4.25% / 12), but when and how is this credited? Is it simply used by HMRC as credit against tax liability for the following period? Or is it credited on the date at which the tax is due (and therefore the number of days in advance it has been paid are known)? Also, is such interest itself taxable, so that as a higher rate tax payer, you'd have to book the interest as income and pay 40% on it? Essentially wondering whether it's better to keep the money in my bank account and earn interest there until the last possible moment, or pay it early to HMRC and earn the interest there. Many thanks

Hi,
If any supplement is due on a payment this will be calculated when the payment is allocated.
If no balance due then the payment will show as a credit on your account.
You would need to decide for yourself when you make the payment but normally you would receive better interest rates at your bank.  
Thank you.

I understand that hmrc pays 4% currently on credit balances on personal tax accounts? Does it make sense to pay the tax now and not wait till January? If this interest is not taxable, then the rate is effectively better than I can get in a normal savings account. (I'm a higher rate tax payer, so any interest earned there is taxable at 40% - earn more than the £500 savings allowance). Is my reasoning correct?

Hi
Please see full details on early/late repayments HMRC interest rates for late and early payments

i have paid CGT early and would like to receive interest for early payment. Can you let me have details of where i should make an application to HMRC? Many thanks

Good afternoon. I have seen it said here that the interest credited by HMRC to those who have paid their taxes early is interest which is not taxable. Is this correct?

Hi Chalkyboy,
Thank you for paying your capital gains tax early.
There is no interest payable for paying this tax early.
Thank you. 
 

Hi 4964matthewc,
Please see the following response given on this forum:
is the repayment supplement (interest) received from HMRC taxable?
Thank you.

I note the Admin 25 Response to Chalkyboy from a month ago. i had understood that repayment interest is payable on early payment of CGT but that it is not taxable, so interest at the current rate of 3.5% equates to a little over 5.8% for a 40% taxpayer. Can Admin 25 clarify, please - not my figures but whether interest is payable on early payment of CGT by an individual taxpayer? Thanks

Hi ,
 

Please have a look at the guidance at :  HMRC interest rates for late and early payments  ,  which includes capital gains tax. Thank you .

I seem to find conflicting information about the repayment interest rate. From the link given by Admin 17: "The repayment interest rate compensates taxpayers fairly, when they overpay, for loss of use of their money." - it seems that the interest is earned if too much tax is paid, rather than paying tax early? To answer the original post by Deepee - no interest would be paid for paying the tax early?

Hi ,
 

Please have a look at the guidance at : HMRC interest rates for late and early payments   .

Thank you .

Thank you Admin 17 for the response. I read the article, but the fact that I haven't been credited the repayment interest either means I didn't understood the article correctly or I am genuinely missing the interest. Do you know when it should appear in my account? Thank you in advance.

Hi Martynas,
We are unable to check individual tax records through this forum, for queries relating to your personal tax situation or tax code please contact our helpline: 
Income Tax - General enquiries
If you have a personal tax account you can amend your estimated income online to update your tax code.
Personal tax account: sign in or set up
Thank you.