HMRC confirms change that will give taxpayers lower interest rates in daysHMRC has announced the dates its new interest rates will take effect.
Depending on the payment plan used by taxpayers, the dates for the diary were August 18 and 27.
The change follows the Bank of England’s recent base rate cut, the Mirror reports.
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The Bank of England Monetary Policy Committee declared a drop in the base rate on August 7.
It will drop from 4.25 per cent to four per cent, marking the lowest it has been since March 2023.
The base rate sets the tone for interest rates for building societies and banks.
It impacts everyone from savers to homeowners, credit card holders and HMRC.
Changes to HMRC’s interest rates will affect those making late tax payments or receiving repayments on their bill.
The current interest rates charged on these payments stand at 8.25 per cent and 3.25 per cent respectively.
The late payment interest rate, which is calculated as the base rate plus four per cent, will drop to eight per cent following the Bank of England’s change.
Repayment interest rates, calculated as the base rate minus one per cent, will now drop to three per cent.
The interest rates for quarterly instalment payments will fall on August 18.
Meanwhile non-quarterly instalment payments will not benefit from the new rates until August 27.
The interest rates were designed to incentivise people to pay tax on time and avoid the late payment interest.
The repayment rate aims to fairly compensate taxpayers for any loss incurred due to overpayments.
Late payment interest rates hit a record high of 8.5 per cent earlier this year – a level not seen since February 2000, according to HMRC data.