New HMRC interest rates for late and early tax payments

Due to the fact that HMRC interest rates are based on the Bank of England base rate, the decision to raise the base rate from 3.5% to 4% on 2 February 2023, has resulted in an additional increase in rates for late payments and tax repayment.

According to a statement from HMRC, the rate will rise starting on 13 February, 2023, for late quarterly instalment payments. Interest for additional late payments will rise starting on 21 February 2023.

The base rate plus one is used to calculate the interest rate for overdue corporate tax instalments. From 13 February 2023, it will rise to 5%.

The interest rate for other taxes that are paid late is calculated using the base rate + 2.5 percent, which means that starting on 21 February 2023, it will rise to 6.5%.

HMRC pays interest at a rate equal to base rate minus one on tax overpayments. Starting on 21 February 2023, it will climb to 3%.