HMRC announces new charges for millions of people from November 18

His Majesty's Revenue and Customs has announced the charges issued for late payment and repayment of taxes will change after a Bank of England announcement on Thursday. The Bank of England Monetary Policy Committee announced on November 7 that it was reducing the base interest rate to 4.75% from 5.0%.

HMRC interest rates are linked to the Bank of England base rate, which means that HMRC interest rates for late payment and repayment will reduce.

The changes will come into effect on November 18, 2024 for quarterly instalment payments and on November 26 2024 for non-quarterly instalments payments

HMRC interest rates are set in legislation and are linked to the Bank of England base rate. Late payment interest is currently set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit - or ‘minimum floor’ - of 0.5%.

The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and the government says is 'compares favourably' with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

A spokesman said: "The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay."