Following the decision of the Bank of England Monetary Policy Committee on May 11, 2023, to raise the Bank of England base rate from 4.25 percent to 4.5 percent, the interest rates for late payments and repayments from the HM Revenue and Customs (HMRC) will be revised.
HMRC interest rates are tied to the Bank of England base rate, and as a result of the increase, there will be an adjustment in the interest rates for late payment and repayment.
The HMRC has announced that the interest rate for late payments will rise to 7 percent, reflecting the new base rate.
Currently, the interest rate for late payments is calculated as the base rate plus 2.5 percent, while the interest rate for repayments is based on the base rate minus one percent, with a minimum floor of 0.5 percent. The HMRC is yet to confirm the new interest rate for repayments.
The revised HMRC interest rates will have an impact on taxpayers who pay their taxes late, as they will be required to pay a higher amount of interest. On the other hand, those who are owed repayments by HMRC will receive a higher amount of interest.
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