You will, no doubt have seen the news that the Bank of England raised the base rate of interest from 4.25% to 4.5% on 11th May. 

Because HMRC’s interest rates are linked to these base rates, it has announced that another increase has been triggered for the rate of interest on late payments and repayments of tax.

From 22nd May, the rate of interest for late quarterly instalment payments will increase and the interest for other late payments will rise from 31st May

For unpaid instalments of corporation tax, the interest is calculated as base rate +1. It will, therefore, increase to 5.5% from 22nd May. 

For the late payment of other taxes, the interest rate is calculated as base rate + 2.5. That means this increase will make the rate 7.5% from 31st May. 

As for interest paid by HMRC on the overpayment of tax, the rate is calculated as base rate -1, meaning it will rise to 3.5% on 31st May.    

For information on your individual circumstances, get in touch today!