Following the Bank of England’s somewhat unexpected announcement on 23 March 2023 that the base rate will rise to 4.25%, HMRC interest rates are also increasing by 0.25%, to 6.75% for late payment interest and 3.25% for repayment interest, from 13 April 2023. 

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 was set at a 'minimum floor' of 0.5% until the base rate reached 1.5%, it now increases with the base rate. 

  • For companies in the Corporation Tax quarterly instalment payment regime, the rate of interest on underpaid instalment payments increases to 5.25% from 5%. Repayment interest rises to 4% from 3.75%. These changes take effect from 3 April 2023.
  • For all other payments, the increase to 6.75% takes effect from 13 April 2023, as does the rise in the repayment interest rate to 3.25%. 
  • It has already been announced that the Official rate of interest, which is most commonly seen in relation to Employment-related loans, will rise on 6 April 2023 for 2023-24 to 2.25%.

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 interest rates for late and early payments

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