HMRC's interest rates are decreasing by 0.25%, to 8.00% for late payment interest and 3.00% for repayment interest, from 27 August 2025.
The rates, which apply to the main taxes and duties administered by HMRC, track the Bank of England base rate.
From 6 April 2025, the late payment rate is set at 4% above the base rate. This was 2.5%, before 6 April 2025. The repayment rate is set at the base rate minus 1% with a 'minimum floor' of 0.5%.
- For companies in the Corporation Tax quarterly instalment payment regime, the rate of interest on underpaid instalment payments decreases to 6.50% from 6.75%. Repayment interest falls to 3.75% from 4.00%. These changes take effect from 18 August 2025.
- For all other payments, the decrease to 8.00% takes effect from 27 August 2025, as does the drop in the repayment interest rate to 3.00%.
The Official rate of interest, which for tax is most commonly associated with Employment-related loans, currently stands at 3.75%.
- From 6 April 2025, this rate is reviewed quarterly, with any changes in the rate occurring following a quarterly review, where appropriate.
- If there are any in-year changes to the rate, these will take effect on 6 July, 6 October and 6 January.
Useful guides on this topic
Penalties: Late Payment
What penalties are charged when tax is paid late?
Penalties: Late Payment MTD
Penalties for late payment of tax under Making Tax Digital for VAT and Income Tax.
External link