HMRC raises late payment interest to highest since financial crisis

HMRC are set to raise interest rates on tax debt from 22 November following the 0.75% increase in the Bank of England base rate.

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 — 5.5% from 22 November 2022
• repayment interest rate — 2.0% from 22 November 2022

This means that the late payment interest rate will increase by 0.75% to 5.5% from 22 November 2022. The rate last increased to 4.75% on 11 October.

In what is bad news for those struggling to keep on top of their tax payments, 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 5.5%.

The repayment interest rate will also be increased from the current 1.25% repayment interest rate to 2.0%.

Corporation tax self-assessment interest rates relating to interest charged on underpaid quarterly instalment payments rises to 5.5%, up from 4.75%.

The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments rises to 2% from 1.25%.

So, there is never a better time than now to make sure that you have an accountant looking after your tax affairs.

We can make sure that you only pay the tax that you truly owe, and have a plan in place so that you know what you need to pay, well in advance of it being due.