Following the Bank of England’s latest increase in the base rate, HMRC has increased both late paid tax and the rate paid on repayments of tax.

The Bank increased the base rate to 4.5% from 4.25% on 11 May, the 12the consecutive rise.

The late payment and repayment interest rates follow this rise and are applied to the main taxes and duties that HMRC currently charges and pays interest.

The late payment interest rate will increase by 0.25% to 7% from 31 May. This is the highest rate since the start of the financial crisis in November 2008.

Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gains tax, corporation tax pay and file, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 7%.

Repayment interest will also be increased from the current 3.25% rate to 3.5%.

Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments rose to 5.25% from 5% a week earlier on 22 May.

Internet link: GOV.UK

The UK rate of inflation fell to 8.7% in April from 10.1% in March, according to the latest data from the Office of National Statistics (ONS).

The fall has been attributed to energy price rises slowing from their hikes in 2022.

The rate at which grocery prices rose slowed marginally in the year to April, but at 19.1% is close to record highs.

The ONS said that while food price inflation was still close to its recent peak, the prices of staples like bread, cereal, fish, milk and eggs were rising slightly less quickly.

Chancellor Jeremy Hunt said:

‘The IMF said yesterday we’ve acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast.

‘So, as well as helping families with around £3,000 of cost-of-living support this year and last, we must stick resolutely to the plan to get inflation down.’

Internet link: ONS

HMRC is reminding employed workers they can claim a refund on work-related expenses on the GOV.UK website.

More than 800,000 taxpayers claimed refunds for work expenses during the 2021/22 tax year.

Although the average claim was £125, over 70% of claimants missed out on getting the full amount they were due because they used an agent to make their claim instead of claiming directly with HMRC.

HMRC says that it is quick and easy to claim a tax refund directly on GOV.UK. This is the only way to guarantee receiving 100% of the repayment – with no small print and no middlemen taking a cut, it adds.

Jonathan Athow, HMRC’s Director General for Customer Strategy and Tax Design, said:

‘Every penny counts and we want to make sure employed workers are getting what they deserve – their hard-earned cash straight back into their pockets. To make a claim just search ’employee tax relief’ on GOV.UK. It is the quickest way of getting a tax refund on your work-related expenses and ensures you get 100% of the money back.’

Internet link: GOV.UK

The Public Accounts Committee (PAC) has criticised the government for losing billions of taxpayers’ money to fraud and error in pandemic support.

The Department for Business and Trade (DBT) is ‘effectively writing off’ nearly £1 billion paid out erroneously by local authorities on its behalf in pandemic support. Meanwhile, of an estimated £2.2 billion lost to fraud and error in Covid-19 schemes, only about £10 million has so far been recovered.

The PAC’s report says the DBT continues to make slow progress on its counter fraud activities related to the Bounce Back Loan Scheme, and its ‘lack of curiosity’ about lenders’ performance increases the risk of losses for the taxpayer.

Despite accepting that grant payments made through councils to their local businesses under Covid-19 business support grant schemes were ‘not in line with how the scheme was meant to work’, the Business Department does not expect to recoup these funds. Of the estimated £985 million of grants paid out in error, only £5.3 million has been recovered.

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said:

‘At a time of financial crisis, the Department for Business has lost billions of taxpayers’ desperately needed funds. It shows no real signs of making the improvements that would prevent the big mistakes it has made over many years, especially during the pandemic, happening all over again.’

Internet link: Parliament website

Businesses are still facing major difficulties in hiring new staff, according to a survey conducted by the British Chambers of Commerce (BCC).

The latest Quarterly Recruitment Outlook (QRO), a survey of more than 5,000 UK firms, found that 80% of those attempting to recruit have faced challenges.

While recruitment difficulties are being experienced across the economy, firms in the hospitality and manufacturing sectors were the most likely to report recruitment difficulties. This is closely followed by the construction and engineering sector and then professional services; and the public, education and health sector.

The BCC is calling on the government to work with business on solutions including skills training, investment and urgent reform of the Shortage Occupations List (SOL).?

Jane Gratton, Head of People Policy at the BCC, said:

‘People shortages are a massive issue and employers can see little sign of improvement. The high number of unfilled job vacancies is damaging businesses and the economy. Firms are struggling to fulfil order books and turning down new work.

‘There is no quick fix and employers and the government need to work together to find solutions. While firms can do more to make workplaces more flexible and jobs easier to access, the government must redouble its efforts to encourage and help people into work.’

Internet link: BCC website