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Do you have tax debts – The rate of late payment interest rates is rising

The interest rates on late tax payments rise again in line with the Bank of England’s (BoE) latest base rate increase as of 11 October.

The base rate, set by the BoE’s Monetary Policy Committee, increased by 0.5 per cent to 2.25 per cent in September, as a result of inflation.

HMRC interest rates are set in legislation and intrinsically linked to the base rate, so the latest rise has triggered the following change to the late payment and repayment interest rates applied to tax debts:

This interest is due on late tax bills for:

The file and pay rate for Corporation Tax increases to 4.75 per cent with effect from 11 October.

Meanwhile, the interest charged on underpaid quarterly instalment payments increase to 3.25 per cent and the interest paid on overpaid quarterly instalment payments and on early payments of Corporation Tax not due by instalments rose to two per cent from 3 October 2022.

The late payment rate last increased to 4.25 per cent on 23 August – the highest rate since January 2009

You should be aware that any further increases in the BoE base rate could further drive-up these rates and increase the cost of tax debts.

Link: HMRC interest rates for late and early payments


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