HMRC’s repayment interest rate is currently 3.00%, and while it doesn’t make headlines, it plays an important role for anyone who has ever paid too much tax. This rate is what HMRC pays you when they return money that was never owed in the first place. With tax rules becoming more complex each year, overpayments are more common than many realise, meaning this small percentage can make a real difference.

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How the 3.00% Repayment Interest Works

Whenever HMRC holds an early repayment, overpayment, repayment interest begins to build. This applies across several tax areas, including:

• PAYE over-deductions due to incorrect tax codes
• Self Assessment overpayments
• CIS deductions that exceed your liability
• Corporation Tax refunds after loss relief claims
• Errors corrected on previously submitted returns

The interest starts accruing from the date HMRC received the excess payment, not from the date you file a correction. This makes early filing and quick error reporting even more worthwhile.

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Why the Repayment Interest Rate Matters

While 3.00% will not outperform most savings accounts, the rate is still significant for three reasons:

1. It’s compensation for HMRC holding your money

The repayment interest is essentially a way of balancing the scales when an overpayment occurs.

2. It helps ease the impact of delayed refunds

HMRC processing times can vary. Repayment interest ensures you’re not financially disadvantaged while waiting.

3. It can accumulate meaningfully over time

For long-standing overpayments, particularly with Corporation Tax or CIS, the interest can add up to a noticeable sum.

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Remember — HMRC Pays Only When an Overpayment Truly Exists

You will not receive repayment interest:

• If your refund relates to penalties or interest being corrected
• If HMRC is waiting for information from you
• If the overpayment arose after you amended a return late
• For tax years where the liability was never actually overpaid

It is not a bonus — it is linked strictly to genuine overpayments.

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Who Should Be Paying Attention?

This rate is especially relevant for:

• Company directors who frequently adjust dividends and payments on account
• Self-employed individuals with fluctuating income
• CIS subcontractors who often overpay through monthly deductions
• Landlords who change between PAYE and Self Assessment
• Businesses carrying losses back for Corporation Tax claims

These groups often find that HMRC owes them more — and repayment interest is part of the return.

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How to Make Sure You Don’t Miss Out

To maximise any refund due:

• File early if you expect a repayment
• Make payment before the due date
• Double-check tax codes and PAYE summaries
• Review CIS statements monthly
• Correct old returns where mistakes were made
• Ensure your accountant revisits prior years when circumstances change

Many taxpayers never realise they were due repayment interest because they never question HMRC’s calculations.

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Thinking You Might Be Owed Money?

A review of your tax position can uncover overpayments stretching back years. With the repayment interest rate set at 3.00%, it’s worth making sure HMRC isn’t holding more of your money than necessary.

If you want a professional review of your tax, refunds and repayments Taxes Done Right can help make sure everything is done properly.