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HMRC raises interest rates again as base rate increases

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HMRC interest rates are linked to the Bank of England base rate.Late payment interest is set at base rate plus 2.5%. Repaymentinterest is set at base rate minus 1%, with a lower limit – or‘minimum floor’ – of 0.5%.

The latest increase to the Bank of England base rate from 5% to5.25% means that interest on late paid tax will increase to 7.75%for most taxes and the rate of repayment interest will increase to4.25% if you overpay.

These changes came into effect on 22 August 2023.

For those companies required to pay their corporation tax byquarterly instalment payments the rate increased to 6.25% from14 August 2023. 

If you are late with your self-assessment payment on account for2022/23 that was due on 31 July 2023 then you should pay assoon as possible to avoid incurring further interest charges. Notethat there is a 5% surcharge added to any tax for 2021/22 stilloutstanding at 28 August 2023 unless you have agreed apayment plan with HMRC. 

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