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


Small acorn
If you like our content come and join us.

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our unique FREE Tax Planning Tips and Advice Guide & our FREE OMB Newsletter.

 

 

Enjoying the Practical Tax content on www.rossmartin.co.uk? 

Sign up now to receive a unique FREE Tax Planning Tips and Advice Guide & our FREE Newsletter.

.Squirrel ad