News

HMRC’s interest rates have decreased from 25 February 2025.

HMRC’s interest rates are decreasing on 25 February 2025.

HMRC’s interest rates are decreasing by 0.25% following the Bank of England’s announcement on 6 February 2025 that the base rate of interest would decrease to 4.5%. The changes take effect from 25 February 2025.

The new interest rates are as follows:

•             Late Payment: 7.00%

•             Repayment: 3.50%

The late payment interest rate is intended to encourage prompt payment and fairness for taxpayers who pay on time. HMRC states that difference between the late payment and repayment rates compares favourably with commercial interest on loans and deposits.

These rates apply to the main taxes and duties administered by HMRC so will affect, for example tax payments for Self Assessment, PAYE/NI, VAT and annual Corporation Tax payments. The interest rate for the quarterly Corporation Tax instalment regime will be 5.50%, reduced from 5.75%, which takes effect from 17 February 2025.

HMRC’s interest rates track the Bank of England base rate, with the late payment rate set at base rate plus 2.5% and the repayment rate set at the base rate minus 1% (with a 'minimum floor' of 0.5%). The late payment interest rate is intended to encourage prompt payment and fairness for taxpayers who pay on time.

The late payment interest rate will, however, increase by 1.5% from 6 April 2025 as announced in the 2024 Autumn Statement.