HMRC has reduced late payment and repayment interest rates following the cut to the base rate.
The Bank of England cut the base rate to 5.0% on 1 August, the first reduction for over four years.
This has triggered a cut in HMRC interest rates which are pegged to the base rate.
From 20 August, the late payment interest rate was cut to 7.5% from 7.75%, where it had been for 12 months. The repayment interest rate was also reduced to 4.0% from 4.25% from 20 August.
HMRC late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.
Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments dropped to 6.0% from 6.25% from 12 August.
The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments is down by 0.25% to 4.75% from 5% from 12 August.
Internet link: GOV.UK
