09 Aug 2023HMRC has revised interest rates for late payments following the Bank of England's interest rate rise to 5.25%. The Bank's Monetary Policy Committee (MPC) recently increased the interest rate by 0.25% from 5% – the 14th increase in a row. It is a 15-year high for the base rate. Late payment bills will be charged 7.75% from 22 August. This figure represents the highest rate since 2001. Late payment interest rates are set in legislation and are linked to the Bank's base interest rate. Late payment interest is set at base rate plus 2.5%, whilst repayment interest is set at base minus 1% with a lower limit of 0.5%. HMRC stated that the late payment rate encourages prompt payment and makes sure the system is fair for individuals who pay their tax on time. The new late payment interest rate will take effect from 14 August for quarterly instalment payments and from 22 August for non-quarterly instalment payments.