HMRC interest rates for late and early payments
HMRC interest rates are set in legislation and are linked to the Bank of England base rate. There are 2 rates:
- late payment interest, set at base rate plus 2.5%
- repayment interest, set at base rate minus 1%, with a lower limit of 0.5% (known as the ‘minimum floor’)
The late payment interest rate encourages prompt payment. It ensures fairness for those who pay their tax on time.
The repayment interest rate compensates taxpayers fairly, when they overpay, for loss of use of their money.
Current late payment and repayment interest rates
The current late payment and repayment interest rates applied to the main taxes and duties that HMRC currently charges and pays interest on are:
- late payment interest rate — 7.75% from 22 August 2023
- repayment interest rate — 4.25% from 22 August 2023
