A HMRC update reveals millions of taxpayers could be charged more this year as a result of the Bank of England hiking up the interest rate.
On Thursday, interest rates were increased to 5%, from 4.5%, the highest rate in 15 years. The move is set to deepen the mortgage crisis as borrowing costs are hiked up for the 13th time in a row.
Following the announcement, HMRC confirmed its interest rates will also increase.
READ MORE: Bank of England interest rate rise to 5% and what it means for you and your mortgage
This means anybody who fails to make a payment for income tax, national insurance, capital gains tax, or stamp duty, among other taxes, on time will be hit with a larger fee than they would have before the interest rate rose again.
HMRC said on Thursday: "As a consequence of the change in the base rate, HMRC interest rates for late payment and repayment will increase." The new rates will come into effect next month.
HMRC's late payment interest is set at base rate plus 2.5%, meaning this is likely to be 7.5% moving forward. Repayment interest is set at base rate minus 1%, therefore likely to become 3%.
Guidance on the HMRC website adds: "The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay."
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