Millions of Brits set to file their tax returns have been alerted about a new change coming in 2026. HMRC has confirmed that interest rates for late payments have been revised.

It is expected that over 12 million Brits will file a Self Assessment tax return for the last tax year (April 6, 2024, to April 5, 2025) by the January 31 deadline. The HMRC charges people £100 if they miss the midnight cut-off. Meanwhile, you also face further fines of £10 a day after three months, up to £900. There’s also a penalty if you pay the fine late.

A total of 5% of the tax is charged if payment is made 30 days late. People are fined an additional 5% if they’re six months late making the payment, and then a further 5% after 12 months.

There is also a late payment interest charged in addition to paying a tax return late. It is currently set at the Bank of England’s base rate plus 4%, resulting in a late payment interest rate of 8%.

However, the base rate has been cut to 3.75%, meaning those who do not pay HMRC on time face a slightly reduced late payment interest rate of 7.75% next month, down from 8%.

These changes are set to be introduced on December 29 for quarterly instalment payments and January 9 for non-quarterly instalment payments.

HMRC said: “HMRC interest rates are set in legislation and are linked to the Bank of England base rate.

“Late payment interest is currently 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%.

“The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

“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.”