HMRC increases penalty interest 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.