Legal entities that pay their provisional 2023 corporation tax assessment in a single instalment before 1 March 2023 will not receive a discount.
Suitable for IB
The payment discount does, however, still apply to provisional income tax and national insurance contributions assessments. Taxpayers who pay the total amount due on these assessments in a single instalment before 1 March 2023 may deduct the payment discount stated on the assessment from the amount of the assessment. Anyone who forgets to deduct the payment discount will pay too much. The Tax and Customs Administration will then refund the payment discount.
Payment discount
In recent years, incidentally, the payment discount for income tax has often been no more than €1. This is because the discount is calculated on the basis of the rate of collection interest. And due to the coronavirus crisis, this rate for income tax stood at just 0.01% for a long time. Based on this rate, the discount – rounded up – almost always amounted to €1.
With effect from 1 January 2023, the rate of recovery interest will rise to 2%; from 1 July 2023, it will rise to 3%; and from 1 January 2024, it will return to the “normal” rate of 4%.
For corporation tax, the interest rate on arrears was not reduced to 0.01%, but to 4%, and as of 1 January 2022, this rate is once again 8%.