HM Revenue & Customs (HMRC) has increased the interest rate applied to late tax payments following the latest hike in the Bank of England base rate.
The late payment interest rate increased to 4.25 per cent from 23 August – the highest rate since the height of the financial crisis in January 2009.
It will put further pressure on those struggling to pay their tax bills in the face of the cost-of-living crisis.
Late payment interest is payable on late tax bills, including:
- Income Tax
- National Insurance contributions
- Capital Gains Tax
- Stamp Duty Land Tax
The Corporation Tax pay and file rate also increased to 4.25 per cent.
What is HMRC repayment interest?
If your company or organisation pays too much Corporation Tax, HMRC will repay what you have overpaid and may also pay you interest on it.
The repayment interest rate has increased for the first time since 29 September 2009 to 0.75 per cent, up from 0.5 per cent.
Interest rates set in legislation
HMRC interest rates are set in legislation and are linked to the Bank of England base rate, so the rise is automatically triggered.
The Bank of England voted in favour of the 0.5 percentage point increase early in August.