Last updated: 14 October 2026
How do Bank of England rate changes affect HMRC interest on Stamp Duty and other taxes?
HMRC’s interest rates follow the Bank of England base rate. Late payment interest is base rate plus 4%, and repayment interest is base rate minus 1%, with a minimum of 0.5%. With base rate at 3.75% since 18 December 2025, HMRC charges 7.75% a year on late Stamp Duty Land Tax (SDLT), income tax, Capital Gains Tax and VAT, and pays 2.75% on refunds. These rates have applied since 9 January 2026, and change a few days after each base rate move.
Current HMRC rates (October 2026)
| Rate | How it’s set | Rate now |
| Late payment interest | Base rate + 4% | 7.75% |
| Repayment interest | Base rate − 1%, minimum 0.5% | 2.75% |
| Bank of England base rate | Set by the Monetary Policy Committee | 3.75% |
Before 6 April 2025, late payment interest was base rate plus 2.5%. The extra 1.5 percentage points make paying late much more expensive.
SDLT and interest
SDLT must be paid within 14 days of completion. If it’s paid late, interest runs daily from the end of that 14-day period until payment. Late filing penalties also apply: £100 if the return is up to 3 months late, rising to £200 after that, and tax-geared penalties if it’s more than 12 months late.
Refunds of the higher rates
If you paid the 5% higher rates on an additional property and then sell your previous main home within 3 years, you can claim a refund of the surcharge. HMRC pays repayment interest from the date the SDLT was paid, at the repayment rate in force over that period.
Example
A landlord’s solicitor files the SDLT return on time but the £12,500 payment goes out 60 days late. At 7.75% a year, interest is about £12,500 × 7.75% × 60 ÷ 365, which is £159. That’s on top of any penalty for a late return, if the return itself was late.
Mortgage rates and landlords
Base rate also affects mortgage costs. For individual landlords, mortgage interest isn’t deducted from rental profit; it gives a 20% tax credit instead. Companies can deduct finance costs in full, subject to the corporate interest restriction for large groups.
Interest is not deductible
For individuals, HMRC late payment interest isn’t a tax-deductible expense against rental or trading income. For companies, late payment interest on corporation tax is deductible, and repayment interest is taxable.
How to avoid interest
- Pay SDLT within 14 days of completion, usually through your solicitor
- Set money aside for Self Assessment payments on account
- Ask for a Time to Pay arrangement early if you can’t pay
- Claim refunds promptly to earn repayment interest
Interest on other taxes
The same late payment rate applies to unpaid Self Assessment, Capital Gains Tax on the 60-day property return, and VAT. Late payment penalties are charged on top in many cases, so paying even part of what you owe reduces the cost.
Frequently asked questions
When will HMRC’s rates change next?
After the next base rate change by the Bank of England.
Does Time to Pay stop interest?
No, interest still runs.
Is repayment interest taxable?
Yes, as savings income for individuals.
Does interest apply in Wales?
Land Transaction Tax has its own interest rules from the Welsh Revenue Authority.
Related: SDLT rates, SDLT refunds and SDLT compared with Land Transaction Tax.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with HMRC interest and Stamp Duty. See our landlord accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
