From 8 May 2025 the UOMI rates on underpayment and overpayment of tax will change. If you overpay any tax or duty, the IRD will pay you back with interest. If you underpay tax, the IRD will charge you interest. They may also charge a penalty with interest. This is often called use of money interest, or UOMI.
What interest is applied to:
- child support deductions by employers (CSE)
- FamilyBoost (FMB)
- fringe benefit tax (FBT)
- goods and services tax (GST)
- imputation accounts
- income tax
- KiwiSaver contributions
- non-resident withholding tax (on interest and dividends)
- PAYE deductions
- residential land withholding tax (RLWT)
- resident withholding tax (RWT) (on interest and dividends)
- student loan deductions by employers
- ESCT (employer superannuation contribution tax)
- Working for Families Tax Credits (WfFTC)
Interest Amounts
Interest gets calculated daily on your overpaid or underpaid tax. It does not compound and is not included when calculating penalties. The interest rates are set by Government and are based on market rates, so they vary over time.
The new rates are:
- Underpayment – 9.89% down from 10.88%
- Overpayment – 3.27% down from 4.30%
When interest starts
If you’ve underpaid tax or duty, interest:
- starts on the day after the original due date for the amount owing, or
- starts from a new due date (if you received Working for Families Tax Credit and you meet specific criteria to have a new due date)
- stops on the day the overdue balance (including interest) gets paid in full.
If you’ve overpaid tax or duty, interest starts on the latest of either:
- the day after the original due date
- the day after payment.
Source: IRD: https://www.ird.govt.nz/managing-my-tax/penalties-and-interest/interest-on-overpayments-and-underpayments
Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.