HMRC interest rates increase for late and early payments
24/10/22
HMRC interest rates are linked to the Bank of England base rate by legislation. The recent interest rate rises have therefore led to an increase in HMRC interest rates.
HMRC says the late payment interest rate encourages prompt payment by taxpayers and ensures fairness for those who pay their tax on time. The repayment rate “compensates taxpayers fairly” for the loss of use of their money, according to HMRC.
The two main HMRC interest rates are:
- Late payment interest rate – 2.5% above base rate (now 3%). From 22 November 2022, this will therefore be 5.5%.
- Repayment interest rate – base rate minus 1% (with a minimum floor of 0.5%). From 22 November 2022, this will be 2%.
Historical equivalent rates have been:
| From | Late payment % | Repayment % |
| 11 October 2022 | 4.75 | 1.25 |
| 23 August 2022 | 4.25 | 0.75 |
| 5 July 2022 | 3.75 | 0.50 |
| 24 May 2022 | 3.50 | 0.50 |
| 5 April 2022 | 3.25 | 0.50 |
| 21 February 2022 | 3.00 | 0.50 |
| 7 January 2022 | 2.75 | 0.50 |
| 7 April 2020 | 2.60 | 0.50 |
| 30 March 2020 | 2.75 | 0.50 |
| 21 August 2018 | 3.25 | 0.50 |
| 21 November 2017 | 3.00 | 0.50 |
| 23 August 2016 | 2.75 | 0.50 |
| 29 September 2009 | 3.00 | 0.50 |
| 24 March 2009 | 2.50 | 0.00 |
For unpaid quarterly instalment payments of corporation tax liabilities, the rate will increase to 4% from 14 November 2022.
If you have any queries concerning interest on late and early payments to HMRC, please contact Jill Springbett at jill.springbett@mgr.co.uk.
Warning: The above is merely general guidance and should not be relied upon as formal advice. The advice we give to each client will depend on their specific circumstances. We suggest you take professional advice before taking any action in relation to the issues discussed above.
