Following the most recent announcement by the Bank of England to raise the base rate from 0.75% to 1%, its highest level in 13 years, HMRC have also announced that the late payment interest rate will rise to 3.5% from 24 May 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 3.25% in March 2022.
- For companies in the Corporation Tax quarterly instalment payment regime, the rate of interest on underpaid instalment payments increases to 2% from 1.75%. This change takes effect from 16 May 2022.
- For all other payments, the increase to 3.5% takes effect from 24 May 2022.
- The interest rate which HMRC will apply to overpayments of tax remains unchanged at 0.5% since 2009. This will not rise until the Bank of England base rate reaches 1.5%.
- The Official Rate of Interest which is most commonly seen in relation to Employment-related loans also remains unchanged at 2%.
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