Following the Bank of England’s decision to reduce the base rate from 5% to 4.75%, HM Revenue and Customs (HMRC) have announced a reduction in their late payment interest rates.
HMRC interest rates track the base rate. Late payment interest (payable if you pay tax late) is set at base rate plus 2.5%. Repayment interest (which HMRC pay you on refunds or overpayments) is set at base rate minus 1%, with a minimum rate of 0.5%.
Therefore, the late payment interest rate will reduce to 7.25%. Repayment interest will reduce to 3.75%.
The reductions come into effect from the following dates:
- 18 November 2024 for quarterly instalment payments; and
- 26 November 2024 for non-quarterly instalments payments.