Following the changes to the Corporation Tax quarterly payment arrangements for large companies announced on Budget Day, the rate of interest on underpayments of corporation tax due under the quarterly instalment arrangements will be reduced by 1% with effect from 20 April 2000. All other Inland Revenue interest rates for unpaid and overpaid tax will remain unchanged.


1. The rate of interest charged on underpaid instalment payments of corporation tax will be decreased from 8.00 per cent to 7.00 per cent. The change takes effect from 20 April 2000 and results from an amendment to the interest rate formula by regulations laid on 29 March.

2. The rate of interest on overpaid instalment payments of corporation tax, and on corporation tax paid early (but not due by instalments), remains unchanged at 5.75 per cent.


1. Section 178 Finance Act 1989 and Statutory Instrument SI 1989 No. 1297, “The Tax (Interest Rate) Regulations 1989”, lay down the procedures and formulae for calculating and amending Inland Revenue interest rates.

2. The provisions for calculating interest rates in respect of instalment payments of corporation tax, and early payments of corporation tax not due by instalments, in respect of accounting periods ending on or after the appointed day for corporation tax self assessment (1 July 1999), are contained in Statutory Instrument SI 1998 No. 3176. The formula for calculating interest on underpayments of quarterly instalments was amended by SI 2000 No. 893, laid on 29 March 2000.

3. The previous changes to these interest rates were set out in a press release dated 18 February 2000.

4. The revised interest rate is based on the average base lending rate of 6.00 per cent calculated in accordance with the Statutory Instruments.

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