HMRC increases interest rates on late tax payments

HMRC has endorsed it will increase interest rates on late tax payments by 0.25% after the Bank of England raised the base interest rate to 1%.

This means that the late payment interest rate will rise to 3.75% from 5 July 2022. On 24th May the rate increased to 3.5%. This is the highest rate since the height of the economic problem in January 2009.

Late payment interest is payable on late tax payment including income tax, National Insurance contributions, capital gains tax, and stamp duty land tax..

Corporation self assessment tax interest rates connecting to interest charged on underpaid quarterly instalment payments increases to 3.75% from 5th July 2022, from 3.5%.

HMRC interest rates are set in legislation and are linked to the Bank of England base rate, which increased from 0.75% to 1% on 5 May 2022.

On quarterly overpaid instalment payments and on early payments of corporation tax not due by instalments increases to 2.25% from 27 June 2022, up from 2%. The repayment interest rate stays intact at 0.5%, and has remained fixed at that rate since 29 September 2009.

Reach your tax return accountant to file self assessment tax return on time to avoid late tax payment penalty.