HMRC late payment interest cut

HMRC has reduced late payment and repayment interest rates following the cut to the base rate.

The Bank of England cut the base rate to 5.0% on 1 August, the first reduction for over four years.

This has triggered a cut in HMRC interest rates which are pegged to the base rate.

From 20 August, the late payment interest rate was cut to 7.5% from 7.75%, where it had been for 12 months. The repayment interest rate was also reduced to 4.0% from 4.25% from 20 August.

HMRC late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.

Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments dropped to 6.0% from 6.25% from 12 August.

The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments is down by 0.25% to 4.75% from 5% from 12 August.

Internet link: GOV.UK