Thousands of UK households are set to be affected by a significant tax alteration, with a call for them to "check if your bill will go down". HMRC, the tax authority under Labour

Party governance, has implemented a change in the interest rates applied to taxes. Starting 28 May 2025, the rate of interest on late payments will drop from 8.5% to 8.25%, triggered by a

reduction in the Bank of England's base rate. HMRC explained: "The late payment interest rate encourages prompt payment. It ensures fairness for those who pay their tax on

time." Moreover, HMRC notes: "The repayment interest rate compensates taxpayers fairly, when they overpay, for loss of use of their money." The setting of HMRC interest rates

of 0.5%, reports Birmingham Live. This minimum floor safeguards that taxpayers receive a consistent 0.5% even when the base rate plummets to 0.1%. Thus, repayment interest remains set at

0.5% until such time as the Bank of England escalates the base rate above 1.5%, upon which it will proportionally increase. The disparity between these rates aligns with global tax

administration policies and is competitive when contrasted with commercial norms for interests levied on loans or overdrafts and those accorded on deposits. The current late payment and

repayment interest rates for the main taxes and duties that HMRC oversees are as follows: late payment interest rate is set at 8.25% from 28 May 2025, and the repayment interest rate is

established at 3.25% from 28 May 2025. This update emerges amid warnings that UK interest rate cuts may have been "too rapid" while wage increases continue robust, potentially

reigniting inflation, as pointed out by the Bank of England's chief economist. Huw Pill remarked on Tuesday that workers appear to be more adept at securing higher wages than

anticipated, which he believes should give policymakers cause to reconsider further reductions in borrowing costs.