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ACCA Strategic Professional · Advanced Taxation (UK) · Inheritance tax: administration and payment, including the instalment option

Under the interest rates assumed in the ATX-UK tax tables for June 2026 to June 2027, which rate applies to inheritance tax that is paid after the due date?

Inheritance tax paid late bears interest at the rate for underpaid tax, assumed to be 8.50%. The official rate of 3.75% is for other purposes, 3.50% applies to repayments of overpaid tax, and 10% is a VAT penalty figure.

  1. A3.75%, the official rate of interest
  2. B8.50%, the rate of interest on underpaid taxCorrect
  3. C3.50%, the rate of interest on overpaid tax
  4. D10%, the annual rate of the daily VAT penalty

Explanation

Late-paid tax carries interest at the rate on underpaid tax, which is 8.50% in the tables. The 3.75% official rate relates to benefits, and 3.50% is paid by HMRC on overpaid tax. The 10% figure belongs to VAT default penalties and not to IHT interest.

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