YF AccountingLast updated: 4 September 2026
7 min read
The Bank of England base rate is 3.75%, where it has sat since December 2025. The Monetary Policy Committee held it again on 18 June and 30 July 2026, and the next decision lands on Thursday 17 September 2026. Most forecasters expect another hold, though opinion is unusually divided: some economists see the next move as up, a minority still expect a cut before the year is out. Whichever way it goes, the base rate feeds directly into your mortgage, your savings, your business borrowing, and the 7.75% interest HMRC charges on late tax.
Rather than guessing the next move, the useful exercise is knowing exactly what the rate touches in your finances, so that whenever it does move, you already know what changes for you. Here is the map.
Where is the base rate now, and when is the next decision?
The base rate is the single most important interest rate in the UK economy. It sets the price at which high-street banks borrow from the Bank of England, and that filters through to almost everything else. The MPC reviews it roughly every six weeks, eight times a year.
| Rate | Currently |
|---|---|
| Bank of England base rate | 3.75% (held since December 2025) |
| Next MPC decision | 17 September 2026 |
| HMRC late payment interest (base + 4%) | 7.75% |
| HMRC repayment interest (base – 1%) | 2.75% |
The Bank duly held at 3.75% on 30 July. Markets broadly expect another hold on 17 September and for much of the rest of 2026, but the forecasts point in genuinely different directions, which is precisely why it pays to plan around the rate as it is, not around a prediction.
What does the base rate mean for your mortgage?
If you are on a tracker mortgage or your lender’s standard variable rate (SVR), your monthly payment moves more or less in step with the base rate. With the rate held at 3.75%, those payments have stabilised after the sharp rises of recent years, but they are not falling either, so do not budget for a sudden drop. If a cut does come, trackers benefit within days; SVRs move only when the lender chooses.
If you are on a fixed-rate deal, nothing changes until your fixed period ends, whatever the MPC announces. The thing to watch is what you are remortgaging onto. Fixed rates are priced on what the market expects the base rate to do over the next few years, not just where it sits today, so a base rate cut does not automatically mean cheaper fixes, because the expectation of it is often already in the price. Get quotes a few months before your deal expires rather than letting it lapse onto the SVR.
What does the base rate mean for your savings?
A higher base rate is generally good news for savers, and at 3.75% there are still genuinely competitive accounts out there. The catch is that banks are slow to pass rises on and quick to pass on cuts, particularly on easy-access accounts. Shop around: the gap between a poor instant-access account and a decent fixed-term bond is significant, and locking a fixed-term rate before a cut is one of the few ways savers can get ahead of the MPC.
One thing to remember: savings interest can be taxable. The Personal Savings Allowance lets basic-rate taxpayers earn £1,000 of interest tax-free each year (£500 for higher-rate taxpayers, nil for additional-rate), and with rates where they are, it is easier than it used to be to tip over the allowance, at which point you may need to think about whether you need to file a tax return.
What does the base rate mean for business borrowing?
For small businesses, the base rate feeds straight into overdrafts, commercial loans and asset finance, most of which are priced at a margin above base. A held rate makes planning easier, since you can forecast finance costs with more confidence than during the rapid changes of a couple of years ago.
The discipline worth keeping whatever happens next: know which of your borrowings are variable and which are fixed, and test your cash flow against a rate half a point either side of today’s. If a quarter-point move would genuinely strain the business, the problem is the borrowing structure, not the MPC. We help clients build exactly this into their forecasts through our bookkeeping and management accounts work, and for bigger decisions our fractional CFO service runs the scenarios properly.
How does the base rate change your HMRC bill?
This is the one people forget. HMRC’s interest rates are pegged directly to the base rate:
- Late payment interest is base rate plus 4%, currently 7.75%. Paying a tax bill late is an expensive form of borrowing, and the charge applies from day one with no grace period.
- Repayment interest on overpaid tax is base rate minus 1%, currently 2.75%. The five-point gap means the system is firmly weighted towards paying on time.
Whenever the base rate moves, both HMRC rates follow automatically a few weeks later. With the second Self Assessment payment on account due on 31 July 2026 now behind us and the 31 January 2027 balancing payment next in line, the cheapest decision this autumn has nothing to do with the Bank of England: pay HMRC on time. The simplest way to avoid late payment interest is to know your deadlines and put money aside in advance; we keep the full rundown in our key UK tax dates and deadlines guide.
How should you plan cash flow around rate decisions?
The businesses that handle rate cycles well do the same four things, whichever way the next decision goes:
- List every rate-linked exposure (variable borrowing, cash deposits, and any HMRC liabilities) so you know your net position within minutes of any announcement.
- Stress-test, don’t forecast. Model your next twelve months at today’s rate, half a point higher, and half a point lower. If all three work, the MPC stops being a source of anxiety.
- Put surplus cash to work. Business savings accounts lag the base rate badly by default; moving idle balances to a competitive account is often worth more than any plausible rate cut.
- Never borrow from HMRC. At base plus 4%, late tax is almost always your most expensive debt. If cash is tight, a Time to Pay arrangement beats simply missing a deadline.
Frequently asked questions
When is the next Bank of England interest rate decision?
Thursday 17 September 2026, followed by 5 November and 17 December 2026. The Monetary Policy Committee meets roughly every six weeks, eight times a year, and announces decisions at midday on a Thursday. At the time of writing, most forecasters expect the base rate to be held at 3.75%, though views on the direction of the next move are genuinely split.
What is the Bank of England base rate now?
3.75%, where it has been since December 2025. The MPC held it at that level through the first half of 2026, including at the 18 June and 30 July meetings. It sets the price at which banks borrow from the Bank of England, and it feeds through to mortgages, savings rates, business finance and HMRC’s interest charges.
What is HMRC’s late payment interest rate?
7.75% a year, the base rate plus 4 percentage points. It applies to late income tax, corporation tax, VAT and most other taxes from the day after the due date. Interest on tax HMRC owes back to you runs at just 2.75% (base minus 1%), so the incentive to pay on time is built into the system.
Will mortgage rates fall if the base rate is cut?
Trackers fall almost immediately and SVRs usually follow, but fixed-rate deals are priced on where markets expect the base rate to go over the next few years, so an anticipated cut is often already baked into fixes before it happens. If you are remortgaging soon, compare deals early rather than waiting for the announcement.
Does the base rate affect my business loan?
If the loan is variable-rate, priced at a margin above base, then yes, your repayments move with every MPC decision. Fixed-rate business loans and most asset finance agreements do not change mid-term. Check each facility’s terms so you know your exposure before the next announcement rather than after it.
Is savings interest taxable?
It can be. The Personal Savings Allowance covers the first £1,000 of interest for basic-rate taxpayers and £500 for higher-rate taxpayers; additional-rate taxpayers get nothing. Interest above the allowance is taxed at your marginal rate, usually collected through your tax code or Self Assessment.
Need a hand planning around interest rates?
If you want to know what the current rate environment actually means for your business borrowing, your surplus cash or your tax deadlines, that is a conversation worth having before the next announcement, not after it. We do fixed-fee accounting with cash flow planning built in: sole traders from £35 a month, limited companies from £50 a month, and you can see the full range of our services here.
Book a free, no-obligation call or ring us on 0161 531 0959 and we will talk it through.
This article is general information, not personal financial advice. Rate expectations reflect market commentary at the time of writing and can change quickly.
Founder of YF Accounting, a fixed-fee, fully digital accountancy practice in Manchester serving SMEs, sole traders and landlords across the UK. One point of contact, unlimited support, no surprise bills.