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ACCA Strategic Professional · Advanced Taxation (UK) · Stamp taxes (stamp duty, stamp duty reserve tax and stamp duty land tax)

Dalton Ltd paid its £12,000 SDLT liability exactly six months after the due date. Using the assumed rate of interest on underpaid tax of 8.50% a year, what interest is payable?

Interest is £510. Late-paid SDLT carries interest at the underpaid tax rate of 8.50%. £12,000 x 8.50% x 6/12 gives £510. The overpaid rate and the official rate are wrong here, and a full year's interest would be £1,020.

  1. A£510Correct
  2. B£210
  3. C£225
  4. D£1,020

Explanation

Late-paid tax carries interest at the underpaid rate of 8.50%. £12,000 x 8.50% x 6/12 = £510. £210 uses the overpaid rate of 3.5%, £225 uses the official rate of 3.75%, and £1,020 ignores the six-month period by charging a full year.

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