From 6 April 2025, HMRC's interest rate charged on the late payment of tax will increase by 1.5%. This follows an announcement made at Autumn Budget 2024.
Background
HMRC's late payment interest rates are linked to the Bank of England base rate.
- Interest on late-paid tax was set at the base rate plus 2.5%. From 6 April 2025, this increases to the base rate plus 4.00% for most taxes.
- Late paid Quarterly instalments of Corporation Tax were previously charged interest at base rate plus 1%. This increases to the base rate plus 2.5% from 6 April 2025.
Impact
From 6 April 2025, the late payment interest rates are:
- Most taxes increase from 7.00% to 8.50%.
- Late paid quarterly instalments of Corporation Tax increase from 5.50% to 7.00%.
Repayment interest rates are not affected and remain at their previous levels.
The next review of the Bank of England base rate is on 8 May 2025.
Useful guides on this topic
Tax Data Card 2025-26
A summary of key tax rates and allowances for 2025-26 and 2024-25.
Corporation Tax instalment payments
When does Corporation Tax (CT) have to be paid by instalments? What are the rules and deadlines?
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 links
HMRC news item: HMRC late payments interest rates to increase from 6 April 2025
HMRC policy paper: Changing late payment interest rates on unpaid tax liabilities
