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Following the increase in the Bank of England base rate to 1% last week, HMRC has confirmed that it will raise interest rates on late tax bills by 0.25%
This means that the late payment interest rate will increase to 3.5% from 24 May 2022. The rate last increased to 3.25% on 5 April. This is the highest rate since the height of the financial crisis in January 2009.
Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gain tax, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 3.5%.
Corporation tax self-assessment interest rates relating to interest charged on underpaid quarterly instalment payments rises to 2% from 16 May 2022, up from 1.75%.
The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments rises to 0.75% from 16 May 2022, up from 0.5%.
The repayment interest rate remains unchanged at 0.5% and has remained fixed at that rate since 29 September 2009.
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