HMRC will reduce late payment and repayment interest rates from 28 May, following the 0.25% cut in the base rate last week.
The Bank of England cut the base rate to 4.25% on 8 May, triggering a corresponding 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% (down from 8.5%) — the highest rate charged since February 2000.
- The repayment interest rate will be cut to 3.25% (down from 3.5%).
HMRC late payment interest is calculated as base rate + 4%. Repayment interest is base rate – 1%, with a minimum floor of 0.5%.
David Bharier, Head of Research at the British Chambers of Commerce, commented:
“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.”
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