Rates of interest paid by and to HMRC and the devolved tax authorities

HMRC has announced that it will increase its late payment interest rates to reflect the rise in the Bank of England base rate. The Bank of England raised interest rates to 0.75% on 2 August 2018. HMRC’s interest rate is set, by regulation, at the Bank of England rate plus 2.5%. The new rate will take effect from 13 August 2018 for quarterly instalment payments of corporation tax, and from 21 August 2018 for other taxes.

Revenue Scotland has made equivalent changes from 8 August 2018. Welsh Revenue Authority interest rates are also tied to Bank of England rates.

HMRC will not be changing the rate of interest it pays on repayments of overpaid tax. This rate is set at the higher of 0.5%, or the Bank of England rate minus 1%. HMRC’s repayment interest rate will therefore remain at 0.5%. By contrast, Revenue Scotland and the Welsh Revenue Authority have set their rate of repayment interest at the higher of 0.5% or the Bank of England rate. Their repayment interest rate will, therefore, rise to 0.75% to reflect the Bank of England rate rise.