ACCA Applied Skills · Taxation (UK) · The time limits for the submission of information, claims and payment of tax, including payments on account
Dina overpaid income tax for 2025-26 and discovers this later. She makes a valid claim for repayment after the return was submitted. Based on the rates provided, her overpayment was £4,000 and HMRC repays it with interest for exactly half a year. What is the interest, and by when must the claim be made?
The interest is £70, calculated as £4,000 x 3.5% x 6/12 using the overpaid tax rate, and the claim must be made within four years of the end of the 2025-26 tax year, so by 5 April 2030.
- A£70, by 5 April 2030Correct
- B£70, by 31 January 2028
- C£170, by 5 April 2030
- D£140, by 5 April 2030
Explanation
Interest on overpaid tax is 3.5%. £4,000 x 3.5% x 6/12 = £70. The rate of 8.5% applies to underpaid tax and would give £170. The claim time limit is four years from the end of the tax year, so 5 April 2030. £140 is a full year of interest, not half.
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