From 11 October, the interest rates on late tax payments rise again in line with the Bank of England’s (BoE) latest base rate increase.
The BoE increased the base rate by 0.5% to 2.25% in September due to inflation.
Due to this, the late payment and repayment interest rates applied to tax debts will rise to:
- Late payment interest rate 4.75%
- Repayment interest rate 1.25%
HMRC-set interest rates are linked directly in legislation to the base rate: so the latest rise has been automatically triggered by these changes.
The late payment rate last increased to 4.25 per cent on 23 August – the highest rate since January 2009.
This interest is due on late tax bills for:
- Income Tax
- National Insurance Contributions
- Capital Gains Tax
- Stamp Duty Land Tax
The file and pay rate for Corporation Tax increases to 4.75% effective 11 October.
Meanwhile, the interest charged on underpaid quarterly instalment payments increases to 3.25%, whilst the interest paid on overpaid quarterly instalment payments and early payments of Corporation Tax not due by instalments rose to 2% from 3 October 2022.
You should be aware that any further increases in the BoE base rate could further drive-up these rates and increase the cost of tax debts.
Get in touch if you need help managing your finances.
