18 December 2025
The Bank of England’s Monetary Policy Committee (MPC) voted to cut the bank base rate by a quarter of a percentage point to 3.75%.
The Committee voted by a majority of five – four to reduce Bank Rate by 0.25 percentage points and four voted to maintain the interest rate. There were no votes to increase the rate this time.
For payroll professionals, it is good to be aware of the impact this announcement has on HM Revenue and Customs’ (HMRC’s) late payment interest charges.
HMRC interest rates are set in legislation and are linked to the Bank of England base rate, these rates are:
- late payment interest – set at base rate plus 2.5%
- repayment interest – set at base rate minus 1%, with a lower limit of 0.5%.
The next Bank of England announcement is set for 5 February 2026.
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