Following the increase of the Bank of England's (BoE) base rate to 1.75%, HMRC will raise late payment interest on tax bills by 0.5%, coming into effect on 23 August 2022.
This means the late payment interest rate will be 4.25%, having already increased to 3.75% on 5 July. This rate is the highest since the height of the financial crisis in January 2009, when it was set at 4.5%.
The repayment interest rate has increased to 0.75% and will come into effect on 23 August, a jump of 0.25% since 5 July.
Late fees and interest are payable on late tax bills covering:
- income tax
- National Insurance
- capital gains tax
- stamp duty land tax
- stamp duty reserve tax.
There has also been an increase in the corporation tax pay and file rate, which is now 4.25%, up from 3.75%.
HMRC interest rates are set in legislation and are linked to the Bank's base rate. The late payment interest rate is set at the base rate plus 2.5%, and the repayment interest is set at the base rate minus 1%, with a lower limit of 0.5%.
Ask us about your tax bill.