IRD adjusts interest rates amid rising tax debts and economic strain

Inland Revenue has announced changes to interest rates applied to tax overpayments and underpayments, effective January 16.

The interest paid to taxpayers who overpay will drop from 4.67% to 4.3%, while the rate charged for underpayment will fall slightly from 10.91% to 10.88%.

These rates, based on Reserve Bank formulas, highlight a wider issue of financial pressure as accountants report an increase in clients facing tax debt.

A recent survey showed that 79% of accountants in public practice have arranged or modified tax debt plans for clients, reflecting the economic struggles businesses are facing due to rising interest rates, a cooling economy, and heightened Inland Revenue audits.

Experts urge taxpayers with debt to seek professional advice and set up repayment plans to avoid further penalties.