HMRC two day warning as people to be hit with higher fees

Nicholas Dawson
·2-min read
A couple check their finances
-Credit: (Image: Getty)


HM Revenue and Customs (HMRC) is set to adjust its interest rates for late payments following the Bank of England's recent decision to lower the base rate. The central bank reduced the base rate from five percent to 4.75 percent, prompting a corresponding decrease in HMRC's rate.

As a result, the HMRC late payment rate will fall from 7.5 percent to 7.25 percent, and the repayment rate will drop from 4 percent to 3.75 percent. These new rates, imposed by the tax authority, will take effect on Monday, November 18, and will apply to quarterly instalment payments.

Information on the Government website states: "HMRC interest rates are set in legislation and are linked to the Bank of England base rate. Late payment interest is currently set at base rate plus 2.5 percent. Repayment interest is set at base rate minus 1 percent, with a lower limit - or ‘minimum floor’ - of 0.5 percent."

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The information page also sheds light on the Government's rationale behind setting these rates. It states: "The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

"The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay." A taxpayer recently reached out to HMRC with difficulties purchasing National Insurance (NI) contributions for their state pension.

They queried over X, asking: "If I wanted to buy back NI credits and can’t do it online, how would I go about it please? Tried calling the Future Pension Service but just get referred back to the website and cut off." HMRC advised that an 18-digit reference number is necessary for online payments, which can be obtained by contacting a helpline advisor.

They also provided a link with information on how to inquire about National Insurance issues. The taxpayer, however, further explained that the issue arose when they logged in, adding: "it says I am unable to make payment online". The tax group said in its response: "If you wish to make the payment online, you'll need a reference number issuing to you, by contacting an adviser on the helpline."

Now is a good time for individuals to check if they have any gaps in their NI record that could be worth filling to boost their state pension. Typically, contributions can only be bought for up to six tax years prior, but currently, this has been extended to include tax years as far back as 2006/2007, with the deadline to top up during this extended window set for April 2025.

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