Following the recent increase in the Bank of England base rate from 0.75% to 1% HMRC has announced there will be changes to the rates of interest they charge.  

The BoE’s Monetary Policy Committee voted 6-3 in favour of raising interest rates by 25 basis points to 1% in a move to stem continued upward pressures on inflation. The members of the Committee in the minority preferred to increase Bank Rate by 50 basis points, to 1.25%.

The late payment interest rate applied to the main taxes and duties that HMRC charges interest on will increase by 0.25% to 3.50% as HMRC interest rates are linked to the Bank of England base rate.

These changes will come into effect on:

• 16 May 2022 for quarterly instalment payments
• 24 May 2022 for non-quarterly instalments payments

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will remain unchanged at 0.5%. This is because the repayment rate is set at Bank Rate minus 1%, with a 0.5% lower limit. This rate has been in place since September 2009.

Source: New feed