Permanent increase to penalty interest rates
The new tax year saw a change to the way interest on late paid taxes is calculated. What’s changed and what are the new charges?
Prior to 2025/26, interest was charged at the Bank of England base rate plus 2.5% on most underpaid taxes. In a push for unpaid tax bills to be settled, it was announced at the 2024 Autumn Budget that this would change to the base rate plus 4% from 6 April 2025. The government says the rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time.
From 6 April 2025 the following rates apply:
- Late corporation tax paid quarterly - 7%
- Late payment interest on other taxes - 8.5%
There is no corresponding change to the way repayment interest rates are calculated, i.e. the base rate minus 1%, with a lower limit of 0.5%.
Related Topics
-
Deadline to issue P60s
-
HMRC launches new R&D advance assurance process
HMRC has introduced a new advance assurance process for research and development (R&D) tax relief claims, aimed at giving eligible companies greater certainty before submitting a claim. What does the new process involve?
-
Dodging tax and NI on 2025/26 benefits
If you had taxable benefits in kind in 2025/26 then you’ll have to pay income tax on the value. Your company also has to pay 15% NI. Now the tax year has passed is there any way you can reduce or eliminate this tax liability?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.