- The UK HMRC has updated its guidance on interest rates for late and early tax payments following the Bank of England’s reduction of the base rate from 4.00% to 3.75% on December 18, 2025, resulting in new late payment and repayment interest rates effective from January 9, 2026.
- As a result of the base rate cut, the late payment interest rate will decrease to 7.75% (down from 8.00%), while the repayment interest rate will be set at 2.75% (down from 3.00%), applicable to various tax payments such as Corporation Tax, Income Tax, National Insurance contributions, and Capital Gains Tax.
- For Corporation Tax quarterly installment payments, the late payment interest rate will be 6.25% starting December 29, 2025 (down from 6.50%), and the repayment interest rate for overpaid quarterly installments and early payments will be 3.50% (down from 3.75%).
Source Orbitax
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