HM Revenue & Customs to increase late payment interest rate

The late payment interest rate will rise after the Bank of England (BoE) Monetary Policy Committee voted to increase the base rate this month, it has been confirmed.

HM Revenue & Customs (HMRC) said the late payment interest rate – which is linked to the BoE base rate – will increase from 2.75 per cent to three per cent from 21 February for non-quarterly instalment payments – such as late tax return outstanding balances.

The late payment interest rate for quarterly instalment payments, meanwhile, will increase from 2.75 per cent to three per cent from 14 February.

Repayment interest rates, however, will remain unchanged at 0.5 per cent.

The announcement comes after it was revealed that more than 19 per cent of Self Assessment customers – around 2.3 million taxpayers – failed to submit their 2020/21 tax returns by the 31 January 2022 deadline.

While late filers will not receive an automatic £100 late payment penalty (fines have been waived for one month until 28 February), interest will still be applied to outstanding balances from 01 February.

Commenting on the figures, Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “I’d like to thank the millions of customers and agents who sent us their tax return and paid in time for this week’s deadline.

“We’re waiving penalties this year, to give those who missed the deadline an extra month. And customers can set up a monthly payment plan online if they’re worried about paying their tax bill. Search ‘Self Assessment’ on GOV.UK to find out more.”

Click here to learn more about HMRC interest rates for late and early payments.

For help and advice with related matters, please get in touch with our team today.

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