Following the Bank of England’s decision to increase the base rate, HMRC have announced that their late payment interest rate will increase by 0.15% to 2.75% from 7 January 2022.

The rate, which applies to late payments of the main taxes and duties administered by HMRC, is tracked at 2.5% above the base rate. It had previously been held at 2.6% since April 2020.

  • For companies in the Corporation Tax quarterly instalment payment regime, the change takes effect from 27 December 2021.
  • For all other payments, the change takes effect from 7 January 2022.
    • HMRC's news story published on 17 December 2021, indicated this change would take effect from 4 January 2022. 
    • HMRC's 'Interest rates for late and early payments' page was updated on 16 February 2022 to amend the date of rate increase from 4 January 2022 to 7 January 2022. 
  • The interest rate which HMRC will apply to overpayments of tax remains unchanged at 0.5%.
  • The Official rate of interest which is most commonly seen in relation to Employment-related loans also remains unchanged at 2%.

Useful guides on this topic

Penalties: Late Payment
What penalties are charged when tax is paid late? 

Penalties: Late Payment MTD
Penalties for late payment of tax under Making Tax Digital for VAT and Income Tax.

External link

HMRC: late payment interest rates to be revised after Bank of England increases base rate 

Rates and allowances: HMRC interest rates for late and early payments

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