HM Revenue & Customs (HMRC) has confirmed higher interest rates on late tax payments. The new rates start on 16 and 24 November 2026.
HMRC announced the change on 6 November, after the Bank of England lifted its base rate from 3.75% to 4.00%.
So HMRC’s late payment interest rate goes up from 7.75% to 8.00%. If you have an unpaid tax bill, it could cost you more from later this month.
Why Is HMRC Increasing Late Payment Interest Rates?
The Bank of England raised its base rate on 5 November 2026. It pointed to rising inflation pressures, including higher global energy costs.
HMRC ties its interest rates to that base rate. Under the current rules, late payment interest sits four percentage points above it.
Repayment interest goes up too. That’s the rate HMRC pays you when you overpay tax, and it rises from 2.75% to 3.00%.
When Will the New HMRC Interest Rates Take Effect?
HMRC has set two dates for the changes.
| Effective Date | Tax Payment Type | New Interest Rate |
| 16 November 2026 | Corporation Tax quarterly instalment underpayments | 6.50% |
| 24 November 2026 | Standard late tax payments | 8.00% |
| 24 November 2026 | HMRC repayment interest | 3.00% |
The rate on quarterly Corporation Tax underpayments rises from 6.25% to 6.50%.
The standard 8.00% rate covers most late payments, including Income Tax, VAT, National Insurance contributions, and Corporation Tax.
Who Will Be Affected by the Higher Rates?
Anyone with unpaid tax, or anyone who might struggle to hit an upcoming deadline, should take note.
This could include:
- Sole traders and freelancers with outstanding Income Tax bills.
- Landlords who pay tax through Self-Assessment.
- Limited companies with unpaid Corporation Tax.
- VAT-registered businesses with overdue VAT payments.
- Companies paying Corporation Tax through quarterly instalments.
If you already owe back tax, pay close attention. The higher rates make it more expensive to leave that tax unpaid.
What Happens If Tax Payments Are Delayed?
Late payment interest adds to what you owe HMRC. The longer a bill sits unpaid, the more interest builds up.
You could also face separate penalties for late payment or late filing, depending on your situation, and in more serious cases an HMRC tax investigation.
Even if HMRC agrees a Time to Pay arrangement, interest can keep building on the balance you still owe.
If you file through Self-Assessment, get ready for 31 January 2027. That’s the deadline to file your online return and pay the tax due for the 2025/26 tax year.
What Should UK Taxpayers Do Now?
The new rates are close, so look at your finances now before extra costs pile up.
Here’s what to do:
- Check your outstanding tax balances and payment deadlines.
- Review your cash flow to make sure you have enough funds.
- Pay off overdue tax where you can.
- Contact HMRC early if you’re struggling to pay.
- Get professional advice before your tax debt grows.
How Can Lanop Help?
Higher HMRC interest rates make it more important to plan your tax payments on time, whether you run a business or pay tax as an individual.
At Lanop Business & Tax Advisors, we help clients understand their tax duties, review what they owe, and plan upcoming payments as part of wider tax planning.
Our accounting and tax advisory support can help you stay informed, manage your cash flow, and meet HMRC requirements.
Worried about unpaid tax or an upcoming deadline? Contact Lanop to review your position and plan your next steps.
