HMRC is reducing the late payment interest applied to the main taxes and duties to 7.75%.
This change came into effect on 9 January 2026 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 was also reduced to 2.75% from 9 January 2026.
In addition, the interest charged on underpaid quarterly instalment payments decreased to 6.25% on 29 December 2025.
The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments decreased to 3.50% on 29 December 2025.
These reductions have been instigated by the Bank of England base rate decrease to 3.75% on 18 December 2025.