Here’s a novelty – a small gift, of a kind,  from HM Revenue & Customs.

Because the Bank of England Monetary Policy Committee last week cut base rate from 5.25% to 5.0% so HMRC interest rates for late payment and repayment will also reduce.

They are linked to the Bank of England base rate so as a result from August 12 the reduced rates will take effect for quarterly instalment payments; and from August 20 for non-quarterly instalments payments.

Late payment interest is set at base rate plus 2.5%. 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 HMRC claims it compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

The Revenue says 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.