HMRC increases penalty interest rates
An increase in the Bank of England base rate also increases the penalty interest charged by HMRC on underpaid taxes. What are the new rates?
Late payment penalty interest is charged at the base rate plus 4%, whilst repayment interest rates are calculated using the base rate minus 1% (with a lower limit of 0.5%). As the base rate increased by 0.25% to 4% on 5 November, a corresponding increase is on the way for penalty interest on underpaid taxes.
From 16 November 2026 interest on late corporation tax paid quarterly will increase from 6.25% to 6.5%. For all other taxes, late payment interest will increase from 7.75% to 8% from 24 November. Repayment interest will also jump from 2.75% to 3% from 24 November.
Related Topics
-
A £3,000 side-hustle allowance: more generous than it looks?
People making money from small side businesses will have more room to earn without paying income tax, following a Budget decision to triple the trading allowance. However, the figure relates to what you receive before expenses, not the profit you keep. Will the £3,000 allowance actually save you tax?
-
Founders' relief: a closer look
The Budget's new Founders' Relief sounds remarkably generous, offering a 10% capital gains tax rate on up to £10 million of gains from selling shares from April 2027. However, a closer look at the proposed qualifying conditions suggests that relatively few business owners will benefit. Why might the relief be so difficult to claim?
-
Will new property tax erode tax efficiency?
You recently purchased a new trading premises for your business and plan to charge your company rent. As tax rates on property income are going up in April 2027, is this arrangement likely to be tax efficient?