HMRC issues new income tax, VAT, National Insurance charges starting this week

HMRC will be implementing their new interest rates on late payments and repayments, following the Bank of England’s base rate drop earlier this month. Following the Bank of England’s announcement on 7 November 2024 that the base rate would decrease to 4.75%, HMRC's interest rates are also decreasing by 0.25%, to 7.25% for late payment interest and 3.75% for repayment interest.

The rates, which apply to the main taxes and duties administered by HMRC, track the Bank of England base rate. The late payment rate is set at 2.5% above the base rate. 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 5.75% from 6%. Repayment interest falls to 4.5% from 4.75%. These changes take effect from 18 November 2024.

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For all other payments, the decrease to 7.25% takes effect from 26 November 2024, as does the fall in the repayment interest rate to 3.75%. The Official rate of interest which is most commonly seen in relation to Employment-related loans, has been set at 2.25% for 2024-25.

The new rates begin on November 26. These are the rates applied to late installments and repayments on main taxes and duties including the likes of Income Tax and National Insurance contributions as well as Capital Gains Tax, Stamp Duty, Stamp Duty Reserve Tax, VAT and Corporation Tax (for paying and filing).

Corporation Tax self assessment and Inheritance Tax are also included alongside Capital Transfer Tax, Estate Duty and also interest on judgement debt taxation matters. The benefit from this reduction in rates may be short-lived. It was announced at the 2024 Autumn Budget that from 6 April 2025, the late payment interest rate charged on unpaid tax liabilities would increase by 1.5 percentage points.