Key takeaways
- HMRC late payment interest rises from 7.75% to 8.00% from 24 November 2026, after the Bank of England raised Bank Rate to 4% on 5 November 2026.
- Since 6 April 2025 the late payment rate has been Bank Rate plus 4%; before that it was Bank Rate plus 2.5%.
- HMRC repayment interest rises from 2.75% to 3.00% from 24 November 2026, set at Bank Rate minus 1% with a 0.5% floor.
- Late payment interest is simple interest: HMRC does not charge interest on interest.
- To work it out, multiply the tax owed by the rate and by the days late, then divide by 365: £10,000 at 8% for 30 days is £65.75.
- Corporation Tax quarterly instalment underpayment interest rises to 6.50% from 16 November 2026.
- Interest is not a penalty, so it runs even if you have a reasonable excuse, and penalties for late payment are charged on top.
HMRC late payment interest will be 8.00% a year from 24 November 2026, up from 7.75%. The rise follows the Bank of England’s decision on 5 November 2026 to raise Bank Rate by 0.25 percentage points to 4%. Repayment interest, which HMRC pays on tax it owes you, rises from 2.75% to 3.00% on the same date.
What is the current HMRC late payment interest rate?
The rate is 7.75% until 23 November 2026 and 8.00% from 24 November 2026. HMRC’s interest rates page, updated on 6 November 2026, confirms the new figures.
| Rate | Until 23 November 2026 | From 24 November 2026 |
|---|---|---|
| Late payment interest | 7.75% | 8.00% |
| Repayment interest | 2.75% | 3.00% |
| CT instalment underpayment | 6.25% | 6.50% (from 16 Nov) |
The main rates apply to Income Tax, National Insurance, Capital Gains Tax, VAT, Stamp Duty Land Tax, Inheritance Tax and Corporation Tax paid under pay and file. Corporation Tax quarterly instalment payments have their own rates, which change on 16 November 2026. Instalment overpayment interest rises from 3.50% to 3.75% on that date.
How is the rate set?
The late payment rate is Bank Rate plus 4%. That margin has applied since 6 April 2025; before then it was Bank Rate plus 2.5%. Repayment interest is Bank Rate minus 1%, with a minimum of 0.5%.
The rates move automatically when the Bank of England’s Monetary Policy Committee changes Bank Rate, with a short delay. The next Bank Rate decision is due on 17 December 2026, according to the Bank of England.
Recent changes to the main late payment rate:
- 8.50% from 6 April 2025
- 8.25% from 28 May 2025
- 8.00% from 27 August 2025
- 7.75% from 9 January 2026
- 8.00% from 24 November 2026
How do you work out late payment interest?
Multiply the tax owed by the annual rate and by the number of days late, then divide by 365. HMRC’s VAT interest guidance uses the same method in its worked example.
- Find the amount of tax unpaid.
- Count the days from the first day the payment is overdue up to and including the day you pay.
- Multiply the amount by the rate (for example 0.08).
- Multiply by the number of days and divide by 365.
- If the period crosses 24 November 2026, work out each part at its own rate and add them.
The interest is simple. HMRC’s Compliance Handbook at CH141100 says late payment interest is not charged on late payment interest. It describes the charge as recompense for the loss of use of the money, not a penalty.
How much interest will you pay at 8%?
These figures use 8.00% for the whole period, so they apply to tax that becomes overdue from 24 November 2026.
| Tax unpaid | 30 days late | 90 days late |
|---|---|---|
| £1,000 | £6.58 | £19.73 |
| £5,000 | £32.88 | £98.63 |
| £10,000 | £65.75 | £197.26 |
A full year late on £10,000 costs £800 in interest alone. Use our payments on account calculator to see what you owe for the 31 January 2027 deadline.
Interest and penalties are separate
Interest runs from the due date whatever the reason for paying late. Because it is not a penalty, a reasonable excuse does not remove it. Penalties are added on top.
For Self Assessment, GOV.UK’s penalties page lists late payment penalties of 5% of the tax unpaid at 30 days, 6 months and 12 months. VAT uses a different system of late payment penalties. Our guides to HMRC penalties and VAT penalties and interest explain each regime.
Which applies to you?
- If you owe Self Assessment tax on 31 January 2027, interest runs at 8.00% from 1 February 2027, unless Bank Rate changes again first.
- If HMRC owes you a repayment, repayment interest of 3.00% applies from 24 November 2026.
- If your company pays Corporation Tax by quarterly instalments, late or short instalments carry 6.50% from 16 November 2026.
- If you already have overdue tax, the days up to 23 November are charged at 7.75% and the days from 24 November at 8.00%.
What to do now
- Pay overdue tax as soon as you can, because interest builds every day.
- If you cannot pay in full, contact HMRC before the deadline about a Time to Pay arrangement. Interest still applies to the balance under a plan.
- Advisers should update client reminders and interest estimates for the 8.00% rate before the January 2027 deadline.
- Check the rate again after the Bank of England decision on 17 December 2026.
Frequently asked questions
What is HMRC’s late payment interest rate from 24 November 2026?
It is 8.00% a year, up from 7.75%. It follows the Bank of England raising Bank Rate to 4% on 5 November 2026.
Is HMRC late payment interest compound?
No. HMRC charges simple interest and does not charge interest on interest already built up.
Can I appeal against late payment interest?
Interest is not a penalty, so you cannot have it removed for a reasonable excuse. You can challenge it if HMRC has used the wrong amount, dates or rate.
What does HMRC pay on overpaid tax?
Repayment interest is 3.00% from 24 November 2026. It is set at Bank Rate minus 1%, with a 0.5% minimum.
Does a Time to Pay arrangement stop interest?
No. Interest continues on the unpaid balance while you pay in instalments, although a plan can stop late payment penalties building up.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.