Following the Bank of England’s announcement on 22 September 2022 that the base rate would rise to 2.25%, HMRC interest rates will also increase by 0.50%, to 4.75% for late payment interest and 1.25% for repayment interest, from 11 October 2022. 

The rates, which apply to the main taxes and duties administered by HMRC, track the base rate. The late payment rate is set at 2.5% above the base rate. The repayment rate is set at a 'minimum floor' of 0.5% until the base rate reaches 1.5%. 

  • For companies in the Corporation Tax quarterly instalment payment regime, the rate of interest on underpaid instalment payments increases to 3.25% from 2.75%.  Repayment interest rises to 2% from 1.5%. These changes take effect from 3 October 2022.
  • For all other payments, the increase to 4.75% takes effect from 11 October 2022 as does the rise in the repayment interest rate to 1.25%. 
  • The Official rate of interest which is most commonly seen in relation to Employment-related loans 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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