Following the increase in the base rate, HMRC has confirmed that the late payment interest rate will rise a quarter of a percent from 21st February 2022.
HMRC has increased the current late payment interest rate applied to the main taxes and duties to 3% from 2.75% effective from 21st February 2022. This is the second rate rise in a month following two consecutive rises in the Bank of England base rate.
The 3% rate is applied to late payments for income tax, National Insurance contributions, capital gain tax, stamp duty land tax, stamp duty and stamp duty reserve tax.
The corporation tax pay and file penalty will also rise to 3% for late payments while the repayment rate remains at 0.5%.
The rate for corporation tax self assessment, if unpaid from normal due date, will also be charged at 3%. The interest charged on underpaid quarterly instalment payments rises to 1.5% from 1.25%.
In line with the December 2021 announcement, interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments remains at 0.5%, unchanged since March 2009.