HMRC to reduce late payment interest

Late payment interest rates on underpaid taxes will soon decrease again due to the recent reduction in the Bank of England’s base rate. What are the new charges?

HMRC to reduce late payment interest

On 7 November 2024 an announcement confirmed a reduction in the Bank of England base rate to 4.75% from 5.0%. As HMRC’s late payment and repayment interest rates are linked to the base rate, it has confirmed that they will also come down.

From 18 November 2024 the following rates will apply:

  • Late corporation tax paid quarterly – 5.75%
  • Interest on overpaid corporation tax – 4.5%

From 26 November, the rates for other taxes will be:

  • Late payment interest – 6.75%
  • Interest on overpaid tax – 3.75%

Penalty interest can be avoided by paying your tax bill on time. As an added bonus to anyone expecting to receive interest on overpaid taxes, note that such interest is free from income tax.

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