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ACCA Strategic Professional · Advanced Taxation (UK) · Tax advantages and disadvantages of alternative courses of action

Using the assumed rates given in the ATX-UK tax tables for the June 2026 to June 2027 sittings, which of the following correctly lists the rate of interest on underpaid tax, the rate of interest on overpaid tax and the official rate of interest?

The ATX-UK tables give 8.50% as the interest rate on underpaid tax, 3.50% on overpaid tax and 3.75% as the official rate of interest. HMRC therefore charges much more on late tax than it pays on repayments, and the official rate is a separate benefit-in-kind rate.

  1. AUnderpaid 8.50%, overpaid 3.50%, official rate 3.75%Correct
  2. BUnderpaid 3.50%, overpaid 8.50%, official rate 3.75%
  3. CUnderpaid 8.50%, overpaid 3.75%, official rate 3.50%
  4. DUnderpaid 3.75%, overpaid 3.50%, official rate 8.50%

Explanation

The tax tables give 8.50% on underpaid tax, 3.50% on overpaid tax and 3.75% as the official rate. The other options swap the rates between the three categories.

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