Latest HMRC Interest Rates Update: What You Need to Know

On 5 November 2026, the Monetary Policy Committee of the Bank of England announced an increase in the base rate from 3.75% to 4.00%. This adjustment impacts various financial sectors, including the rates set by HMRC.

As a direct result of the base rate change, HMRC will raise its interest rates associated with late payments and repayments. These new rates will take effect on the following dates:

• 16 November 2026 for quarterly instalment payments
• 24 November 2026 for non-quarterly instalment payments

Details regarding the updated interest rates for these payments will be announced shortly.

Understanding HMRC Interest Rate Calculation

The interest rates set by HMRC are determined by legislation and are directly linked to the Bank of England’s base rate. Currently, late payment interest is established at the base rate plus 4%. In contrast, repayment interest is calculated as the base rate minus 1%, with a guaranteed minimum of 0.5%.

This structure creates a clear distinction between late payment and repayment interest rates, aligning with the practices of tax authorities globally and offering a competitive comparison with commercial interest rates applied to loans, overdrafts, and deposits.

The approach to late payment interest serves to promote timely payments and ensures equity for those who fulfil their tax obligations on schedule. Meanwhile, the repayment interest rate is designed to fairly compensate taxpayers for the loss of access to their funds when overpayments occur.