Inheritance Tax Act 1984 section 235

Interest on overpaid tax

Section 235 deals with the entitlement to receive interest on inheritance tax that has been overpaid, and the tax treatment of that interest.

• When HMRC repays inheritance tax that was paid in excess of the actual liability, interest is added to the repayment.
• Interest runs from the date the original overpayment was made until the date HMRC issues the repayment order.
• The interest rate used is the rate applicable under section 178 of the Finance Act 1989, which is the standard rate set by HMRC for repayment interest.
• Any interest received on overpaid tax is not treated as income for any tax purposes, so it does not need to be included in income tax or corporation tax returns.