Guidance: Rates and allowances: HMRC interest rates for late and early payments

HMRC interest rates are set in legislation and are linked to the Bank of England base rate. There are 2 rates:

The late payment interest rate encourages prompt payment. It ensures fairness for those who pay their tax on time.

The repayment interest rate compensates taxpayers fairly, when they overpay, for loss of use of their money.

The lower limit for repayment interest made sure that taxpayers continued to get 0.5% even when the base rate fell to 0.1%.

Repayment interest will be paid at 0.5% until the Bank of England raises the base rate above 1.5%. Then it will increase with the base rate.

Why repayment and late payment rates are different

The difference between rates is in line with the policy of other tax authorities worldwide. It compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

Current late payment and repayment interest rates

The current late payment and repayment interest rates applied to the main taxes and duties that HMRC currently charges and pays interest on are:

HMRC interest rates are shown in the following tables.

Income Tax, National Insurance contributions, Capital Gains Tax, Stamp Duty Land Tax, Stamp Duty, Stamp Duty Reserve Tax (from 1 October 1999), VAT (for periods starting on or after 1 January 2023), Alcohol Duty (from 1 September 2025) and Vaping Product Duty (from 1 October 2026)

Corporation Tax pre-pay and file Stamp Duty Reserve Tax (to 30 September 1999) and Petroleum Revenue Tax — reg 3AA

Corporation Tax Self Assessment, from normal due date

Inheritance Tax, Capital Transfer Tax and Estate Duty — reg 4A