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05 Nov, 2024 — Late tax payment interest rate changes
Missing your tax payments is going to get more expensive
HMRC is increasing the interest rate for late tax payments - nothing to worry about if you're paying on time.
From 6 April 2025, interest on late or unpaid taxes increase by 1.5%. The new rate will be the Bank of England base rate plus 4%.
The current BoE base rate, for example is 5% which means late payment interest will be at 9%. The current rate is BoE Base Rate + 2.5%, or 7.5% during November 2024.
Freelancers often face variable income and cash flow, so it's important to be aware of changes, as well as keeping on top of your tax liabilities. Putting aside the correct amount after each invoice, as well as completing your tax return early, and paying your taxes ahead of the deadline, are all essential ways to avoid any fines.
Whilst you should always be able to afford your tax (as it's a percentage of your income), in your first year of freelancing, you may not have budgeted for additional payments like payment-on-account, so you could find yourself with a shortfall.
Make sure you're clear on your tax obligations, and if you're unsure, speak to an accountant.
There's more details on Freelance Informer and Ifamagazine