Does HMRC pay interest on a late CIS refund?

Does HMRC pay interest on a late CIS refund? Yes, but only from 31 January after the tax year ends. For 2025-26 CIS deductions, repayment interest runs from 31 January 2027. The rate has been 2.75% a year since 9 January 2026. It is tax-free. 2.75% a year, from 9 January 2026, according to GOV.UK's HMRC interest rates page. It is set at the Bank of England base rate minus 1%, with a floor of 0.5%. No. HMRC's Self Assessment manual says its system calculates repayment interest when a repayment is made, but it is worth checking the payment if your refund arrived after 31 January following the tax year. No. Section 749 of the Income Tax (Trading and Other Income) Act 2005 says no income tax arises on repayment interest paid by HMRC. Read the full answer, with every source, at rightotax.co.uk.