HMRC cuts late payment interest rate to 7.75%

HMRC cuts late payment interest rate to 7.75%

Following the recent cut in base rate, HMRC is going to reduce interest rates on late payments in the second week of January.

HMRC interest rates for late payment and repayment will reduce by 0.25%. Late payment rates reduce to 7.75% from 9 January, while repayment rates reduce to 2.75%.

It is the first time HMRC rates have been reduced since 27 August 2025, reflecting cuts in the Bank of England base rate.

The changes will come into effect on two different dates, with 9 January 2026 set for non-quarterly instalments payments, and earlier for quarterly instalments payments, effective from 29 December 2025.