HMRC announced revised interest rates on late and early tax payments, effective 27 August 2025.

HMRC published updated interest rates for late and early payments on 8 August 2025, following the Bank of England’s 7 August decision to lower the base rate.There are 2 rates:

  • late payment interest set at base rate plus 4% from 6 April 2025 (was plus 2.5% on or before 5 April 2025)
  • repayment interest, set at base rate minus 1%, with a lower limit of 0.5% (known as the ‘minimum floor’)

The lower limit for repayment interest

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.

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:

  • late payment interest rate — 8.00% from 27 August 2025
  • repayment interest rate — 3.00% from 27 August 2025.