HMRC Late Payment Interest Rates to Be Revised After Bank of England Increases Base Rate
The Bank of England Monetary Policy Committee announced on 2 February 2023 that it would increase the Bank of England base rate to 4% from 3.5%.
HMRC interest rates are linked to the Bank of England base rate.
As a consequence of the change in the base rate, HMRC interest rates for late payment and repayment will increase.
These changes will come into effect on:
13 February 2023 for quarterly instalment payments
21 February 2023 for non-quarterly instalment payments.
Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit - or ‘minimum floor’ - of 0.5%.
The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.