Taxes Management Act 1970 section 87

Interest on overdue income tax deducted at source

Section 87 deals with the interest charged on income tax that deposit-takers, building societies and certain companies have deducted at source but failed to pay over to HMRC by the due date.

• Income tax deducted at source by deposit-takers and similar entities carries interest from the due date until the date of payment, at the rate set under the Finance Act 1989.
• Interest applies regardless of whether a formal assessment has been made and even if the due date falls on a non-business day such as a weekend or bank holiday.
• Where overdue tax is later discharged or repaid because the entity suffered tax by deduction in a later return period, interest runs only until the earliest of the payment date, the filing date for the later period's return, or 14 days after the end of that later period.
• A "return period" is the period for which a return must be made under the rules governing collection of tax from deposit-takers, building societies and certain companies.