HMRC raises late payment interest rates after Bank of England move
UK tax interest rates are changing after the Bank of England raised its base rate to 4.00% from 3.75% on 5 November 2026. The revised HMRC rates for late payment and repayment take effect from 16 November 2026 for quarterly instalment payments and from 24 November 2026 for non-quarterly instalment payments.
Highlights
- HMRC will increase interest rates for late payment and repayment in line with the Bank of England base rate change, effective from 16 November 2026 for quarterly instalments and 24 November 2026 for non-quarterly instalments.
- Current late payment interest is set at the Bank of England base rate plus 4%, while repayment interest is the base rate minus 1% with a minimum floor of 0.5%.
- HMRC states the interest rate gap matches global tax authority standards and aligns with commercial borrowing and deposit practices.
Rate changes and implementation dates
As reported by GOV.UK, HMRC says its interest rates for late payment and repayment will increase because they are linked in legislation to the Bank of England base rate.The updated timetable applies from 16 November 2026 for quarterly instalment payments and from 24 November 2026 for non-quarterly instalment payments. HMRC says information on the payment interest rates will be updated shortly.
Taxpayer impact and policy rationale
Under the current framework, late payment interest is set at the base rate plus 4%, while repayment interest is set at the base rate minus 1%, subject to a minimum floor of 0.5%. That means the Bank of England's latest rate increase feeds through directly into the tax authority's charging structure.HMRC says the gap between late payment and repayment interest is consistent with the approach used by other tax authorities globally and compares favourably with commercial borrowing and deposit practices. The department says late payment interest is intended to encourage prompt tax settlement, while repayment interest is designed to compensate taxpayers fairly when they have overpaid.
Our earlier article on expectations for a Bank of England rate hike explained that persistent inflation pressures and stronger UK economic data were pushing markets and economists toward a higher Bank Rate. We noted that many forecasters were leaning toward a 25-basis-point increase, with inflation projected to remain above the BoE’s target and policymakers signaling readiness to tighten if needed.
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