On 5 August 2022, the HMRC declared the revision of late payment and repayment interest rates following the base rate increase by the Bank of England to 1.75%.
The Bank of England Monetary Policy Committee voted on 4 August 2022 to increase the Bank of England base rate to 1.75% from 1.25%.
As a consequence of the change in the base rate, HMRC interest rates for the late payment will increase. These changes will come into effect on:
- 15 August 2022 for quarterly installment payments
- 23 August 2022 for non-quarterly installments payments
The repayment interest rate will increase to 0.75%. The repayment rate is set at Bank Rate minus 1%, with a 0.5% lower limit.
Late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit of 0.5%. The lower limit ensured that taxpayers continued to receive 0.5% repayment interest even when base rate fell to 0.1%. Repayment interest will continue to be paid at 0.5% until the Bank of England raises base rate above 1.5%, after which repayment interest will increase with base rate.
