Interest rates for late payments of tax, and for tax repayments, are to be revised following the latest Bank of England interest rate rise to 3.5%.
The new rates will apply:
- from 26 December 2022 for quarterly instalment payments; and
- from 6 January 2023 for non-quarterly instalment payments.
Information on interest rates for payments is to be updated shortly. However, we already know that HMRC interest rates are set in legislation and are linked to the Bank of England base rate:
- Late payment interest is set at base rate plus 2.5%.
- Repayment interest is set at base rate minus 1%, with a lower limit, but subject to a “minimum floor” of 0.5%.