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Aug 9, 2022

HMRC late payment rates to be revised

HMRC will be revising the late payment rates for tax returns following the Bank of England's (BoE) rise in interest rates.

After the BoE's monetary policy committee voted to raise the base rate from 1.25% to 1.75% on 4 August, HMRC announced it will be revising interest rates to reflect inflation.

The late payment increases will come into effect on:

  • 15 August 2022 for quarterly instalment payments
  • 23 August 2022 for non-quarterly instalment payments.

The repayment interest rate will increase to 0.75%. The rate is set at the bank rate minus 1%, with a 0.5% lower limit.

The BoE's decision to raise interest rates by 0.5% was the highest increase in 27 years, taking UK rates to the highest level since the end of 2008.

The Bank expects inflation to return to the BoE's target of 2% in around two years, after a projected peak of 13% in October, although BoE's Deputy Governor Dave Ramsden has said it's likely there will be further increases in interest rates before it goes back down.

" I do think it's more likely than not that we will have to raise the Bank Rate further. But I haven't reached a firm decision on that," Ramsden said.

"I'm going to look at the indicators, look at the evidence as we approach each upcoming meeting."

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