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 3.75%, from 5 July 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 3.5% in May 2022.
- For companies in the Corporation Tax quarterly instalment payment regime, the rate of interest on underpaid instalment payments increases to 2.25% from 2%. This change takes effect from 27 June 2022.
- For all other payments, the increase to 3.75% takes effect from 5 July 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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