The issue noted is that the difference in interest between late payments and refunds sees HMRC paying an interest rate of only 3.5 per cent on tax overpayments - calculated as the base rate minus 1 per cent (though never less than 0.5 per cent).
A slight downturn in late payment interest rates for more than 1.1 million late filers was announced, as HMRC reduced it from 7.25 per cent to 7 per cent - calculated by adding 2.5 per cent to the base rate.
Though the move provides some financial relief to potentially millions of people, tax specialist Andy Wood from Tax Natives said: "While this drop in HMRC's late payment interest offers some relief, it's hardly significant in the grand scheme of things.
HMRC revealed earlier this month that over 11.5 million taxpayers beat the deadline to file their tax return for the 2023-2024 tax year by the end of January - even though thousands left submitting their returns until the final hour.
The real issue is that taxpayers still pay double the interest on late payments compared to what HMRC pays them in refunds.
