HMRC Interest rates
HMRC have confirmed that taxpayers will be guaranteed a minimum interest rate on tax repayments of 0.5% even where the Bank of England base rate falls below 1.5%.
The change is part of secondary legislation announced in the 2009 Budget to harmonise interest rates across all HMRC taxes and took effect from 22 July 2009. The other changes will fully take effect following the September meeting of the monetary policy committee (MPC). The process will result in some HMRC interest rates changing even if there is no change in rate announced in the base rate.
The new HMRC interest rates will take effect 13 working days after the change in Bank of England base rate.
The interest rates charged on late payments by taxpayers will be calculated using the Bank of England base rate plus 2.5% whilst the interest rate on tax repayments will be the Bank of England base rate less 1% (with a 0.5% minimum).
The new rates will not be applied retrospectively.