HMRC Interest Rates
The rate HMRC charges on tax you pay late, and the rate it pays you on tax it owes back — both tied to the Bank of England base rate and updated automatically whenever the base rate moves.
Want to work out what you actually owe (or are owed) rather than just the rate? Use the HMRC Interest Calculator to enter your amount and dates and get the full day-by-day breakdown.
Late payment interest
7.75%
Charged on unpaid tax from the day after the due date. Effective from 9 January 2026.
Repayment interest
2.75%
Paid to you on tax HMRC owes back, e.g. an overpayment. Effective from 9 January 2026.
How HMRC sets these rates
Both rates are calculated directly from the Bank of England base rate, so they move automatically whenever the Monetary Policy Committee changes it — HMRC typically publishes the revised figures two to four weeks after each base-rate decision, rather than on a fixed quarterly cycle like some other tax authorities.
- Late payment interest — Bank of England base rate + 4 percentage points, effective from 6 April 2025. Before that date the margin was + 2.5 percentage points; the increase was announced at Autumn Budget 2024 to make paying tax late more expensive relative to commercial borrowing rates.
- Repayment interest — Bank of England base rate − 1 percentage point, with a minimum floor of 0.5% so it never goes to zero even if the base rate itself falls to 1% or below. This formula has not changed.
The gap between the two rates (currently 5% percentage points) is deliberate: HMRC charges more for late payment than it pays for repayment, both to discourage using unpaid tax as free credit and to keep the incentive to pay on time stronger than the incentive to overpay and claim interest back.
Late payment vs repayment interest
Late payment interest runs from the day after your payment was due until the date you pay in full, charged daily on the outstanding balance. It applies whether or not a separate late-payment penalty also applies — interest and penalties stack, they are not alternatives to each other.
Repayment interest (sometimes called "early payment interest" in HMRC's own guidance) is what HMRC pays you when it owes you money — most commonly a Self Assessment refund, an overpaid payment on account, or tax deducted at source that exceeds your final liability. It generally starts from whichever is later: the date you paid the tax, or the normal due date for that tax year.
Which taxes these rates apply to
The published late payment and repayment rates cover the main taxes HMRC administers:
- Self Assessment — Income Tax, Class 2 and Class 4 National Insurance, and payments on account.
- PAYE — employer Income Tax and Class 1/1A National Insurance deductions.
- VAT — late-paid VAT (on top of the separate VAT penalty-points regime).
- Capital Gains Tax — including the 60-day residential property CGT return and payment.
- Corporation Tax — standard-rate late payment interest; large companies paying by quarterly instalments use a separate, related instalment rate published on the same gov.uk page.
Rate history since 2022
Every rate below is read directly from the site's central rate table (never hand-typed into this page), so it can't drift out of sync with the Self Assessment penalty calculator, which uses the same data.
| Effective from | Late payment | Repayment | BoE base rate | Formula |
|---|---|---|---|---|
| 9 January 2026 | 7.75% | 2.75% | 3.75% | base + 4pp |
| 27 August 2025 | 8% | 3% | 4% | base + 4pp |
| 28 May 2025 | 8.25% | 3.25% | 4.25% | base + 4pp |
| 6 April 2025 | 8.5% | 3.5% | 4.5% | base + 4pp |
| 25 February 2025 | 7% | 3.5% | 4.5% | base + 2.5pp |
| 26 November 2024 | 7.25% | 3.75% | 4.75% | base + 2.5pp |
| 20 August 2024 | 7.5% | 4% | 5% | base + 2.5pp |
| 22 August 2023 | 7.75% | 4.25% | 5.25% | base + 2.5pp |
| 11 July 2023 | 7.5% | 4% | 5% | base + 2.5pp |
| 31 May 2023 | 7% | 3.5% | 4.5% | base + 2.5pp |
| 13 April 2023 | 6.75% | 3.25% | 4.25% | base + 2.5pp |
| 21 February 2023 | 6.5% | 3% | 4% | base + 2.5pp |
| 6 January 2023 | 6% | 2.5% | 3.5% | base + 2.5pp |
| 22 November 2022 | 5.5% | 2% | 3% | base + 2.5pp |
| 11 October 2022 | 4.75% | 1.25% | 2.25% | base + 2.5pp |
| 23 August 2022 | 4.25% | 0.75% | 1.75% | base + 2.5pp |
| 5 July 2022 | 3.75% | 0.5% | 1.25% | base + 2.5pp |
| 24 May 2022 | 3.5% | 0.5% | 1% | base + 2.5pp |
| 5 April 2022 | 3.25% | 0.5% | 0.75% | base + 2.5pp |
| 21 February 2022 | 3% | 0.5% | 0.5% | base + 2.5pp |
| 7 January 2022 | 2.75% | 0.5% | 0.25% | base + 2.5pp |
Repayment interest carries a statutory minimum floor of 0.5% — visible in the 2022 rows above, where the Bank of England base rate was low enough that base − 1pp would otherwise have gone to zero or negative.
Frequently asked questions
What is the current HMRC late payment interest rate?
The current HMRC late payment interest rate is 7.75%, effective from 9 January 2026. It applies to unpaid Self Assessment, PAYE, VAT, Corporation Tax and Capital Gains Tax balances and is set at the Bank of England base rate (currently 3.75%) plus 4 percentage points.
What is the current HMRC repayment interest rate?
The current HMRC repayment interest rate is 2.75%, effective from 9 January 2026. HMRC pays this on tax it owes you — for example after a Self Assessment overpayment — calculated as the Bank of England base rate minus 1 percentage point, with a minimum floor of 0.5%.
Why did the HMRC late payment interest rate change on 6 April 2025?
From 6 April 2025 HMRC widened the late payment interest margin from Bank of England base rate + 2.5 percentage points to base rate + 4 percentage points — a policy change announced at Autumn Budget 2024 intended to make paying tax late more expensive relative to commercial borrowing. The repayment interest formula (base rate − 1 percentage point) was not changed.
Does the HMRC interest rate change automatically with the base rate?
Yes. Both rates are calculated directly from the Bank of England base rate using the formulas above, so whenever the Monetary Policy Committee moves the base rate, HMRC publishes a matching revision — typically taking effect two to four weeks after the MPC's decision.
Which taxes do HMRC's interest rates apply to?
The published late payment and repayment rates apply across the main taxes HMRC administers: Self Assessment Income Tax and Class 2/4 National Insurance, PAYE and Class 1/1A NIC, VAT, Corporation Tax, and Capital Gains Tax (including the 60-day residential property CGT charge). Corporation Tax quarterly instalment payments made by large companies use a separate, related rate set out on the same gov.uk page.
Is HMRC interest the same as a late filing or late payment penalty?
No — interest and penalties are separate and both can apply at once. Interest simply compensates HMRC (or you, for repayment interest) for the time value of money and runs from the day after the due date until paid, with no fixed cap. Penalties are additional fixed or percentage charges for lateness itself. See the Self Assessment penalty calculator to combine both for a Self Assessment bill.
Sources
Related Calculators
Self Assessment Penalty Calculator
Work out HMRC's full filing and payment penalty ladder plus interest for your own numbers.
UK Tax Deadlines Calendar
Every HMRC key date for Self Assessment, PAYE, VAT and Corporation Tax.
Tax Refund Estimator
Check if you're owed a Self Assessment refund from HMRC.