HMRC interest rates are set in legislation and are linked to the Bank of England base rate. There are 2 rates:late payment interest, set at base rate plus 2.5%repayment interest, set at base rate minus 1%, with a lower limit of 0.5% (known as the ‘minimum floor’)The late payment interest rate encourages prompt payment. It ensures fairness for those who pay their tax on time.The repayment interest rate compensates taxpayers fairly, when they overpay or pay early, for loss of use of their money.
Source: gov.uk
