Paying HMRC late is about to get a little more expensive. Following the Bank of England’s first rate rise in over three years, HMRC has confirmed that the interest it charges on overdue tax is going up, and with the January Self Assessment deadline on the horizon, the timing is worth paying attention to.
📈 What’s changed?
The Bank of England announced on 5 November that the base rate would go up to 4.00% from 3.75%, and it was the first time that interest rates have been hiked in more than three years. Because HMRC’s rates are tied to the base rate, they follow automatically. HMRC late payment interest will be 8.00% a year from 24 November 2026, up from 7.75%, while HMRC repayment interest rises from 2.75% to 3.00% from 24 November 2026.
💡 Why does this matter?
Since 6 April 2025 the late payment rate has been Bank Rate plus 4%; before that it was Bank Rate plus 2.5%. That means the gap between what HMRC charges you and what you might earn on savings is wider than it used to be. Late payment interest is charged from the first day a payment is overdue, on top of any late payment penalties.
There may be more to come, too. The Bank’s Governor said the rise “shouldn’t be seen as the first in an inevitable long sequence of hikes”, but unless the conflict is resolved, it does not seem likely to be the last increase either. The next Bank Rate decision is due on 17 December 2026
✅ What should you do?
- Check with your Client Manager if you have a Self Assessment balancing payment or payment on account due on 31 January and start setting funds aside now.
- If you run a payroll, note that the November 2026 electronic payment deadline falls on Sunday 22 November 2026, so funds need to be cleared into HMRC’s account by 20 November 2026, unless a faster payment can be arranged.
- If you already know you can’t pay a bill in full, talk to us early about a Time to Pay arrangement rather than letting interest build up.