Following the recent Bank of England announcement to increase the base rate to 4.5% as of 11 May 2023, HMRC has announced that their interest rates are also increasing by 0.25%.

This means that the new rates are:

Late payment interest: 7%
Repayment interest: 3.5%

The new rates will take affect from 31 May 2023.

HMRC’s late payment rates are applied to the main taxes administered – and follow the base rate. The late payment interest charge is set at 2.5% above the base rate.

The repayment interest rate is set at a ‘minimum’ of 0.5% until the base rate reaches 1.5%, where it then increases based on the base rate.