HMRC hikes interest on unpaid tax to 4.25% HMRC is increasing interest rates on unpaid tax to a 13-year high of 4.2%. This is six times the rate paid on money it owes and marks a 1.5% increase since the start of 2022. While the Bank of England has raised the base rate from 1.25% to 1.75%, HMRC has increased the rate it pays on repayments by 0.25% to 0.75%. An HMRC spokesperson said: “The interest we charge and pay ensures we do not encourage people to overpay their tax to secure a higher interest rate than available commercially, and that those paying their tax late do not get an unfair financial advantage over those paying on time.”