HMRC Is Charging 7.75% Interest on Late Corporation Tax. Here’s the Maths Your Clients Need to See

Since the 9th of January 2026, HMRC’s late payment interest rate for corporation tax sits at 7.75% per year. Clients who’ve grown used to low-interest environments may not have registered how much this has shifted. The maths below makes it concrete.

How does HMRC’s late payment interest rate for corporation tax work?

The interest rate is set by legislation and tied directly to the Bank of England base rate. Since 6 April 2025, the formula is base rate plus 4 percentage points. Before that date, it was base rate plus 2.5%. The increase was announced at Autumn Budget 2024 and represented the most significant structural change to the charging mechanism in years.

Interest starts accruing from the day after the payment deadline. For most companies, corporation tax is due 9 months and 1 day after the end of the accounting period. That’s a separate and earlier deadline than the filing deadline, which falls 12 months after the period end. It’s a distinction many clients miss, and missing it is expensive.

Interest runs daily until HMRC receives cleared funds. There’s no grace period and there’s no cap. Unlike the fixed filing penalties, which are one-off charges, late payment interest compounds the longer the liability remains outstanding.

How has the HMRC corporation tax interest rate changed in recent years?

Here’s the recent history, sourced from GOV.UK:

The jump from 2.75% in early 2022 to the current 7.75% represents a near-tripling of the rate in four years. A client who was casually late on their CT payment in 2021 and paid a modest interest charge may apply the same mental model today and be in for quite a shock.

What can accountants do to protect clients from late payment interest?

Three things make the biggest difference in practice.

1. Separate the payment conversation from the filing conversation
   When you’re preparing CT computations, flag the payment due date explicitly alongside the filing deadline. Don’t assume clients know they’re different. A short, direct message at the point of preparing the return — stating the date and the amount due — removes ambiguity and gives clients enough lead time to arrange funds.

2. Build payment deadline tracking into your practice workflow, not just filing deadline tracking
   If your practice management system only reminds you when returns are due, you’re half a step behind. Deadline tracking that covers both obligations, with client alerts built in, is the operational standard practices need to be hitting now that both interest rates and fixed penalties are materially higher.BrightManager by Bright handles deadline tracking across your entire client portfolio, covering both CT payment and filing obligations, with automated reminders before key dates. BrightTax by Bright manages the CT600 workflow through to submission, giving you a clear view of each client’s liability and timeline. Used together, they close the gap between knowing a deadline is coming and acting on it early enough to matter.

3. Use the maths
   Abstract interest rates don’t land. “You’ll owe HMRC an extra £1,937 if this sits unpaid for six months” does. Proactive communication using real numbers is both better client service and a stronger signal that your practice is on top of it.

How does BrightTax by Bright compare to alternatives for managing corporation tax deadlines?

The main alternatives for CT workflow management in UK practices are TaxCalc, IRIS Personal Tax and Corporation Tax, and Andica CT600.

BrightTax by Bright integrates directly with BrightManager by Bright for deadline tracking, removing the need to maintain a separate workflow tool alongside the tax software. For practices that want CT computation, filing, and deadline management in a single connected environment, BrightTax by Bright is built for that workflow.

Along with BrightManager by Bright, BrightTax by Bright is also integrated with:

• BrightAccountsProduction by Bright

• BrightWorkpapers by Bright

• Xero

• QuickBooks

• Sage

BrightTax by Bright and BrightManager by Bright help practices track CT payment and filing deadlines across every client, so nothing slips and clients are never caught off guard by avoidable interest charges.

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.