HMRC increases penalty interest rates

An increase in the Bank of England base rate also increases the penalty interest charged by HMRC on underpaid taxes. What are the new rates?

HMRC increases penalty interest rates

Late payment penalty interest is charged at the base rate plus 4%, whilst repayment interest rates are calculated using the base rate minus 1% (with a lower limit of 0.5%). As the base rate increased by 0.25% to 4% on 5 November, a corresponding increase is on the way for penalty interest on underpaid taxes. 

From 16 November 2026 interest on late corporation tax paid quarterly will increase from 6.25% to 6.5%. For all other taxes, late payment interest will increase from 7.75% to 8% from 24 November. Repayment interest will also jump from 2.75% to 3% from 24 November. 

Institute of Chartered Accountants in England and Wales