Source: United Kingdom – Executive Government Non-Ministerial Departments 2
HMRC late payments interest rates to increase from 6 April 2025
HMRC interest rates for late payments will be increased by 1.5% for all taxes from 6 April 2025.
The HMRC interest rates for late payments will be increased by 1.5% for all taxes from 6 April 2025 following a change in legislation.
This increase was announced at Autumn Budget 2024 and the change will take effect from 6 April 2025.
Information on the interest rates for payments will be updated shortly.
How HMRC interest rates are set
HMRC interest rates are set in legislation and are linked to the Bank of England base rate.
Late payment interest was set at base rate plus 2.5%. From 6 April 2025 this will increase to base rate plus 4.00% for most taxes.
Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5% and remains unchanged.
The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.
The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay.