Interest on late income tax payments soars to £513 million as HMRC hikes interest rate to its highest level since 2007

Those paying their tax bill late have been hit with millions of pounds of interest by HMRC since 2020. We explain how the interest rate works and what it means for your tax bill

Blocks spelling tax on top of coins
(Image credit: Getty Images)

HMRC has charged £513 million in interest on the late payment of income tax since 2020. The new figures come shortly after it hiked the interest rate on overdue tax payments to its highest level since August 2007.

The interest rate charged on late tax payments after three months rose to 4% above the Bank of England base rate on 6 April. Previously, interest was levied at 2.5% above base rate.

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Ruth Emery
Contributing editor

Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.

She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.