As HMRC interest rates are linked to the Bank of England base rate, its 4 August increase from 1.25% to 1.75% has triggered another increase in rates for late payments.
HMRC has announced that the rate will increase with effect from 15 August 2022 for late quarterly instalment payments, and that late payment interest for other late payments will increase from 23 August 2022.
The rate of interest on unpaid instalments of corporation tax liabilities is calculated as base rate plus one. It will increase to 2.75% from 15 August 2022.
The rate of interest for the late payment of other taxes is calculated as base rate plus 2.5, so will increase to 4.25% from 23 August 2022.
The rate of interest paid by HMRC on the overpayment of tax will also increase to 0.75% on 23 August 2022 – the first change since 29 September 2009. The repayment rate is calculated as the higher of:
- 0.5%; and
- base rate minus one.
Tax Faculty
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More support on tax
ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.
Sign up for TAXwireJoin the Tax FacultyThe future of tax after COVID
As digital technologies transform society, the UK government is grappling with balancing the books while ensuring its tax system is fit for purpose. Join us as we take a look at the issues and challenges facing the tax system.
Read more