HMRC reduced late payment and repayment interest rates from 28 May following the 0.25% cut in the base rate.

The Bank of England cut the base rate to 4.25% on 8 May, triggering a 0.25% cut in HMRC interest rates which are pegged to the base rate.

From 28 May, the late payment interest rate was cut to 8.25% from 8.5%, which was the highest rate charged since February 2000.

The repayment interest rate was cut to 3.25% from 3.5% from 28 May.

HMRC late payment interest is set at base rate plus 4%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.