HMRC raises interest rates after Bank of England decision, from 16 and 24 November 2026
After the Bank of England raised its base rate to 4.00%, HMRC interest on late payments and repayments will rise. The new rates apply from 16 and 24 November 2026.
Author: Editorial teamPublished: 2 min read
Contents
HM Revenue and Customs (HMRC) has announced an increase in the interest it charges on late payments and pays on repayments of overpaid tax. The reason is the Bank of England's decision to raise its base rate.
What the Bank of England decided
The Bank of England's Monetary Policy Committee announced on 5 November 2026 that it was raising the base rate from 3.75% to 4.00%. HMRC's notice about the effect on its rates was published on GOV.UK on 6 November 2026.
When the new rates apply
HMRC interest rates are linked to the base rate, so interest on both late payments and repayments will go up. The changes take effect on two dates:
- 16 November 2026 for quarterly instalment payments,
- 24 November 2026 for non-quarterly instalment payments.
HMRC said information on the rates would be updated shortly. The announcement does not yet give the new figures.
How the interest is set
HMRC rates are set in legislation and linked to the base rate. Late payment interest is currently the base rate plus 4 percentage points. Repayment interest is the base rate minus 1 percentage point, with a lower limit of 0.5%.
With a base rate of 4.00%, that formula would give 8.00% for late payments and 3.00% for repayments. This is our own calculation from the rules described, not figures given in HMRC's announcement.
HMRC explains that the higher rate on late payments is meant to encourage prompt payment and to be fair to people who pay their tax on time. Repayment interest, in turn, is meant to compensate taxpayers for not having use of their money when they overpay.
What this means for you
The change affects anyone who owes HMRC money, for example people who file self assessment returns or run a business. The higher the rate, the more interest will build up on late payments. On the other hand, taxpayers receiving a refund of overpaid tax may get slightly higher interest on it, as long as the rate is above the 0.5% floor.
It is worth checking the current rates on GOV.UK once HMRC publishes its updated information.
Sources
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