Paying your tax late is about to cost more. The HMRC late payment interest rate is rising to 8% this month, after the Bank of England raised its base rate to 4.00% on 5 November 2026. HMRC’s interest rates move in step with the Bank of England, so the rise feeds straight through to anyone who misses a tax deadline. Here is what is changing, when it takes effect, and what it could cost you.
What is the HMRC late payment interest rate now?
From later this month, the HMRC late payment interest rate will be 8.00% a year. It is worked out by a simple formula set in law: the Bank of England base rate plus 4%. With the base rate now at 4.00%, up from 3.75%, the maths gives 8.00%.
The change does not apply to every tax on the same day. HMRC has confirmed two start dates:
| Payment type | New 8% rate applies from |
|---|---|
| Quarterly instalment payments | 16 November 2026 |
| Non-quarterly instalment payments | 24 November 2026 |
Most individual taxpayers pay in the second group — for example, Self Assessment bills paid by 31 January or 31 July — so the 8% rate will apply to their late payments from 24 November 2026. Quarterly instalments mainly affect larger companies paying corporation tax by instalments.
What about repayment interest?
There is a small piece of good news in the same announcement. If HMRC owes you money — for example, because you overpaid tax — the repayment interest it pays you is also going up. Repayment interest is set at the base rate minus 1%, so it rises from 2.75% to 3.00%. There is a minimum floor of 0.5%, so it cannot fall below that even if the base rate drops sharply.
The gap between the two rates is deliberate: HMRC charges more for late payment than it pays on refunds, which it says encourages prompt payment and matches how other tax authorities work.
What does 8% interest actually cost?
HMRC charges interest daily from the day after the deadline until the day the tax is paid. The charge is on the amount of tax you owe, so even a short delay adds up. Here is a rough worked example at the new 8% rate:
| Tax owed | Days late | Interest at 8% (approx.) |
|---|---|---|
| £1,000 | 30 days | £6.58 |
| £2,000 | 30 days | £13.15 |
| £5,000 | 90 days | £98.63 |
| £10,000 | 180 days | £394.52 |
These figures are approximate — they assume simple interest at 8% a year — but they show the pattern: a £5,000 bill left unpaid for three months now attracts almost £100 in interest alone. And interest is charged on top of any penalties, which are separate. If you miss a Self Assessment deadline, late payment penalties can also apply, so the total cost of paying late can grow quickly.
Which taxes does this affect?
The 8% rate applies to late payments across the main taxes HMRC collects, including Self Assessment, VAT and PAYE. The key dates to remember are the ones that already apply to your tax:
- Self Assessment tax return: 31 January for the balancing payment and first payments on account, and 31 July for the second payment on account.
- VAT: your usual VAT return and payment deadlines.
- PAYE: the monthly payment deadline for employers.
If you pay on time, the change costs you nothing. It only bites when a payment is late — which is exactly why HMRC sets the rate above the base rate.
What to check now
- Check your next deadline. Self Assessment payers should note 31 January 2027 for the 2025/26 balancing payment and first payment on account. Put the date in your calendar now.
- Pay in instalments if it helps. You do not have to wait until the deadline. HMRC lets you pay towards your bill in advance, including weekly or monthly payments through a Budget Payment Plan, so the amount due on the day is smaller.
- Set up a Direct Debit or bank payment early to pay your Self Assessment bill. Bank transfers can take up to three working days, so leave enough time for the money to reach HMRC before the deadline.
- If you cannot pay, act before the deadline. HMRC may agree a Time to Pay arrangement, spreading what you owe over monthly instalments. Contacting HMRC early is far better than missing the date and paying 8% interest on top of penalties.
- Check whether HMRC owes you. If you overpaid tax, repayment interest is now 3.00%, so a refund is worth slightly more than it was. Make sure HMRC has your correct bank details so any refund reaches you promptly.
Frequently asked questions
Q: What is the HMRC late payment interest rate now?
A: It is rising to 8.00% a year. The rate is the Bank of England base rate (now 4.00%) plus 4%, as set out in legislation.
Q: When does the 8% rate start?
A: From 16 November 2026 for quarterly instalment payments and from 24 November 2026 for non-quarterly instalment payments, which covers most individual taxpayers.
Q: Why has the HMRC late payment interest rate gone up?
A: Because the Bank of England raised its base rate from 3.75% to 4.00% on 5 November 2026. HMRC’s late payment and repayment interest rates are linked to the base rate, so they move automatically when it changes.
Q: What is the HMRC repayment interest rate?
A: It rises to 3.00% — the base rate minus 1% — with a minimum floor of 0.5%. This is the interest HMRC pays you when it refunds overpaid tax.
Q: Does the 8% rate apply to penalties as well?
A: No. Interest and penalties are separate. Interest is charged daily on the tax you owe from the day after the deadline, while penalties for late filing or late payment are charged under their own rules and can apply on top of the interest.
This article gives general information about UK tax, not personal financial or tax advice. Tax rules can change, and your situation may be different. Check GOV.UK or speak to a qualified accountant before you act.
