HMRC to raise late-payment and repayment interest rates

HMRC will increase its late-payment and repayment interest rates following the Bank of England’s decision to raise the base rate from 3.75% to 4.00%.

The changes take effect on 16 November 2026 for quarterly instalment payments and on 24 November 2026 for non-quarterly instalment payments. The Bank’s Monetary Policy Committee announced the base-rate increase on 5 November 2026.

HMRC’s interest rates are set in legislation and linked to the Bank of England base rate. Late-payment interest is currently set at four percentage points above base rate. Repayment interest, paid to taxpayers who have overpaid, is set at one percentage point below base rate, subject to a minimum of 0.5%.

HMRC said its published information on payment interest rates would be updated shortly.

The department says the gap between the two rates is consistent with the policies of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and paid on deposits.

Its stated rationale is that late-payment interest encourages prompt payment and ensures fairness for taxpayers who pay on time, while repayment interest fairly compensates those who overpay for the loss of use of their money.