HMRC cuts late payment interest rate

HMRC will reduce late pay­ment and repay­ment inter­est rates from 28 May fol­low­ing the 0.25% cut in the base rate ear­li­er in the month.

The Bank of Eng­land cut the base rate to 4.25% on 8 May, trig­ger­ing a 0.25% cut in HMRC inter­est rates which are pegged to the base rate.

From 28 May, the late pay­ment inter­est rate will be cut to 8.25% from 8.5%, which was the high­est rate charged since Feb­ru­ary 2000.

The repay­ment inter­est rate will be cut to 3.25% from 3.5% from 28 May.

HMRC late pay­ment inter­est is set at base rate plus 4%. Repay­ment inter­est is set at base rate minus 1%, with a low­er lim­it — or ‘min­i­mum floor’ — of 0.5%.

Fol­low­ing the cut to the base rate David Bhari­er, Head of Research at the British Cham­bers of Com­merce said:

‘Many firms, des­per­ate for finan­cial respite, will be keen to see fur­ther rate cuts in the months ahead.

‘Nation­al insur­ance hikes, along­side oth­er cost pres­sures, are already hav­ing an impact, includ­ing increased prices, hir­ing freezes, and reduced invest­ment.

‘The next few months are like­ly to remain volatile and the full impacts of a glob­al trade war are still uncer­tain. Busi­ness­es will be look­ing to gov­ern­ment to pro­vide sta­bil­i­ty and avoid any fur­ther pain.’

Inter­net link: GOV.UK BCC