HMRC has revised interest rates with late payment bills charged 7% from 31 May, double the level just a year ago
The late payment and repayment interest rates follow the rise in the Bank of England base rate to 4.5% on 12 May and are applied to the main taxes and duties that HMRC currently charges and pays interest. The rates will rise to:
- late payment interest rate — 7% from 31 May 2023
- repayment interest rate — 3.5% from 31 May 2023
This means that the late payment interest rate will increase by 0.25% to 7% from 31 May. The last rate increase was on 13 April. This is the highest rate since the start of the financial crisis in November 2008.
Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gain tax, corporation tax pay and file, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 6.75%.
Repayment interest will also be increased from the current 3.25% rate to 3.5%.
Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments rises to 5.25% from 5% a week earlier on 22 May.
With late payment interest now 2.5% above the Bank of England base rate, HMRC continues to pay lower interest to taxpayers affected by overpayments of tax at 3.5% while it collects twice as much interest from taxpayers who pay late.
The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments rises to 4.25% from 4% from 22 May.