HMRC is raising interest on tax debt from 6 January 2023 after the Bank of England (BoE) increased its base rate to 3.5% on 15 December.
The current interest rates that HMRC charges are as follows:
- late payment interest rate - 6% from 6 January 2023
- repayment interest rate - 2.5% from 6 January 2023.
The late payment interest rate last increased to 5.5% on 22 November 2022 and will be raised a further 0.5% from 6 January onwards, making this the highest rate since January 2009.
The current 2% repayment interest rate will also increase by 0.5% to 2.5% on 6 January, meaning HMRC will also pay a higher rate to customers who overpaid their taxes or paid too early.
Affected taxes include income tax, National Insurance contributions (NICs), capital gains tax and stamp duty land tax. HMRC will also raise interest on corporation tax self-assessment and inheritance tax rates.
According to HMRC, the increase encourages prompt payment and fairness to taxpayers who pay on time. Meanwhile, the repayment interest rate fairly compensates customers who have overpaid their taxes.
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