08 May 2025
As expected The Bank of England’s Monetary Policy Committee (MPC) voted to reduce the bank base rate today.
Five members of the MPC voted to reduce the interest rate by 0.25 percentage points; two members voted to reduce the interest rate by 0.5 percentage points and two members preferred to maintain the rate at 4.5%. There were no votes to increase the rate this time.
Even though inflation is currently above the 2% target at 2.6%, the MPC has advised that changes in global trade policies will impact the economy. Inflation is currently following a bumpy path, to ensure it stays low, the MPC will carefully consider how far and how fast to cut interest rates.
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 19 June 2025.
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.