Following the Bank of England’s recent announcement increasing the base rate, HMRC have announced that their late payment interest rate will also increase by 0.25% to 3% from 21 February 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 was increased to 2.75% in January 2022. Late payment interest rates have not been this high since 2018.
- For companies in the Corporation Tax quarterly instalment payment regime, the change takes effect from 14 February 2022.
- For all other payments, the change takes effect from 21 February 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
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