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September Questions and Answers

Newsletter issue – September 2023

Q. I see that one of the Inheritance Tax (IHT) forms has been amended - the C4 for correcting information previously submitted. I'm getting a bit confused with the forms I have here and wonder if you could point to these C forms and give the most current reference?

A: Yes, the C4 was updated on 27 July 2023, used to correct information previously submitted on the IHT400 where too much or too little IHT was declared. The change on the updated form is in the repayment authority section and is now specific that any refund will be repaid to the individual, thereby rendering void any assignments or repayments.

The current 'C' forms are below:

Q. When the Bank of England raised interest rates (which it might do again!), we assume HMRC followed suit with their interest rates on late payment of Stamp Duty. Can you please advise these rates and link us to the page where they are declared on HMRC's website?

A: Yes, HMRC are always swift to update their late payment and repayment rates, the reason being is that they are linked to the Bank of England rate (known as the bank rate or base rate). This is currently 5.25%. Search for the guidance ' Rates and allowances: HMRC interest rates for late and early payments' which is updated when the rates change. The latest version says the following about the two interest rates:

  • Late payment interest rate is 7.75% (actually, 5.25% base rate + 2.5%)
  • Repayment interest rate is 4.25% (actually, 5.25% base rate less 1%)

You mention Stamp Duty and this is devolved to Scotland and Wales (called Land and Buildings Transaction Tax and Land Transaction Tax). Interestingly, the late payment and repayment interest rates are NOT linked to the Bank of England base rate. Look at the websites for the devolved tax collection agencies, namely Revenue Scotland and the Welsh Revenue Authority.

Q. When we have an employee on maternity leave (receiving SMP), we know when she receives a salary increase that we must go back and recalculate her average weekly earnings as if she had been on that increased salary when we calculated SMP in the first place. We have assumed this is the same when someone is on adoption leave (and receiving SAP). Can you confirm?

A: This is one of those things that ONLY affects Statutory Maternity Pay. You are correct in that a pay increase at any time in her maternity leave period means a recalculation of SMP (and paying any excess). So, for example, a salary increase in week 39 of the leave period means going all the way back to look at her average weekly earnings - in the 8-week relevant period. This is written to legislation and included in HMRC's Statutory Payments Manual.

BUT, for any other child-related statutory payment (adoption, paternity etc), you only recalculate the payment if the pay increase was effective in that 8-week relevant period. This is also included in HMRC's Statutory Payments Manual.

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