As HMRC interest rates are linked to the Bank of England base rate, its 22 September increase from 1.75% to 2.25% has triggered another increase in rates for late payments and repayment of tax.
HMRC has announced that the rate will increase with effect from 3 October 2022 for late quarterly instalment payments, and that late payment interest for other late payments will increase from 11 October 2022.
The rate of interest on unpaid instalments of corporation tax liabilities is calculated as base rate plus one. It will increase to 3.25% from 3 October 2022.
The rate of interest for the late payment of other taxes is calculated as base rate plus 2.5, so will increase to 4.75% from 11 October 2022.
The rate of interest paid by HMRC on the overpayment of tax is calculated as base rate minus one. It will increase to 1.25% on 11 October 2022.
ICAEW Know-How from the 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 from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.