HMRC RAISE INTEREST RATES AGAIN AS BASE RATE INCREASES

HMRC interest rates are linked to the Bank of England base rate. Late payment interest is set at the base rate plus 2.5%. Repayment interest is set at the base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.

The latest increase in the Bank of England base rate from 4.5% to 5% means that interest on late paid tax will increase to 7.5% for most taxes and the rate of repayment interest will increase to 4% if you overpay.

These changes came into effect on 11 July 2023.

For those companies that must pay their corporation tax by quarterly instalment payments, the rate increased to 6% from 3 July 2023.

If you are late with your self-assessment payment on account for 2022/23 that was due on 31 July 2023, you should pay as soon as possible to avoid incurring further interest charges. Note that there is a 5% surcharge added to any tax still outstanding on 28 August 2023 unless you have agreed on a payment plan with HMRC.