Use of Money Interest Rate Change

Use of Money Interest Rate Change

Use of Money Interest Rate Change

Use of Money Interest is charged by the IRD interest when too little tax is paid. They also pay interest when too much tax is paid. The amounts differ significantly however.

Although the Use of Money Interest rates are not penalties per se, they are designed to act as a deterrent when you pay your tax late.

The IRD review rates regularly to ensure that they are aligned with market interest rates.

From May 8, 2016, new interest rates apply:

  • Interest on underpayments will reduce from 9.21% to 8.27%
  • Interest on overpayments will reduce from 2.63% to 1.62%

Penalties often apply in addition to interest on late tax payments. Fortunately tax pooling and financing products exist to ensure that in many cases we can reduce the amount of interest you have to pay and eliminate any penalties. We have a previous blog on tax pooling if you would like to know more. You can read that here.

Contact us for more information.

Angus is the CEO and founder of Generate Accounting.

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