HMRC is reducing the late payment interest applied to the main taxes and duties to 7.00%.
This change will come into effect on 25 February 2025 for Corporation Tax non-quarterly instalment payments, Income Tax, National Insurance contributions, Capital Gains Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, VAT, Inheritance Tax, Capital Transfer Tax, and Estate Duty.
The repayment interest rate will also be reduced to 3.50% from 25 February 2025.
In addition, the interest charged on underpaid quarterly instalment payments will decrease to 5.50% with effect from 17 February 2025.
The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments decreases to 4.25% from 17 February 2025.
These reductions have been instigated by the Bank of England base rate decrease to 4.50% on 6 February 2025.