The Government is switching £400 million of grant funding set aside for future international climate finance projects into loans, which could include projects such as the Tropical Forests Forever Facility. This provides more flexible ways to meet our international climate objectives. The terms, repayment schedules and interest rates of any loans will depend on the final design of individual investments and will be considered in line with normal value for money and Official Development Assistance requirements.

The situations of homeowners and renters are not directly comparable. If a tenant does not pay their rent, they face the real possibility of eviction. Homeowners have more flexibility to negotiate repayments with their lenders during periods of financial difficulty, and their mortgage payments allow them to acquire a significant asset.

The help homeowners, with or without children, can receive towards their mortgage payments is designed to provide a level of support that protects them from the threat of repossession. We have broad agreement with the lending industry that the support we provide is sufficient to achieve this aim.

The department has recently published research looking at the impact and effectiveness of Support for Mortgage Interest (SMI) loans. This is available here: Impact Assessment of Support for Mortgage Interest loans and was published on 6^th May 2025.

As announced at the Budget in 2024, HMRC amended legislation to increase the late payment interest rate by 1.5 percentage points (ppts). This changed interest rates from Bank of England base rate + 2.5 ppts to base rate + 4 ppts.

This change took effect as HMRC’s current interest was low when compared to commercially available short-term borrowing. This creates unfairness between those who pay on time and those who choose not to, using HMRC as a form of cheap lending.

The measure aimed to address this by bringing HMRC’s rates closer to those commercially available. The late payment interest rate increase was made to encourage taxpayers to pay on time, help raise vital revenue for public services, and ensure fairness for those who pay on time.

These changes took effect from 6 April 2025 and are applied where interest is charged to existing and new tax debts owed to HMRC.

This measure encourages people to pay the outstanding tax they owe, increasing incentives to engage with HMRC and make payment arrangements, as well as complying to avoid late payment penalties.

There is no proposal to publish any analysis or evidence as HMRC continues to keep its interest rates under review.

At Autumn Budget 2025, the Chancellor announced a reduction in the Cash Individual Savings Accounts (ISA) limit for those under 65, to encourage retail investment and drive better returns for savers.

Rules are needed to protect to integrity of the new Cash ISA limit. We have designed the rules to be as simple as possible for providers and consumers, and to retain maximum flexibility for consumers to build an investment portfolio that works for them.

Returns from investing remain tax free. Investors will still be able to hold cash in a non Cash ISA, but a flat rate charge will apply on any interest on cash held within a non Cash ISA to discourage long-term cash holdings.

A flat rate charge on interest on cash holdings in S&S ISAs was previously in operation prior to 1 July 2014.

The Government continues to support cash saving with a generous set of reliefs. Individuals under 65 will still be able to save up to £12,000 into a Cash ISA each year, and any savings income received in a Cash ISA will be tax free. Provisional figures for the average Cash ISA subscription in 2023/24 are £6993.

Outside of the ISA regime, there is a Personal Savings Allowance of up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, and the Starting Rate for Savings, which allows for tax free savings income of up to £5,000 for those with earned income below £17,570. This means that in 2026-27 around 84 per cent of people with savings income will pay no tax on that income.

Low and stable inflation is essential for long-term economic growth and sustained increases in living standards. It reduces uncertainty and eases costs for businesses and consumers, allowing them to make long-term planning and investment decisions.

The independent Monetary Policy Committee has the government’s full support as it acts to return inflation to the 2% target sustainably.

HMRC treats interest in line with other tax authorities and financial institutions by having a differential between the interest it pays, and the interest charged. This differential is currently 5ppt, with both Repayment Interest and Late Repayment Interest linked to the Bank of England base rate that reflects wider economic conditions and gives transparency for those tracking its rates.

In setting rates, HMRC weighs up various factors to provide transparency and ensure fairness for those who do pay on time, the cost to the public purse of delayed payment, and increasing the tax debt.

The differential between late payment and repayment rates supports appropriate compliance incentives within the tax system. This makes sure that HMRC does not become the lender of first preference to some customers, impairing its ability to efficiently collect taxes and fund public services.

This also ensures taxpayers do not benefit from delaying payment by effectively borrowing from HMRC at lower rates than are available through commercial short‑term lending. It also avoids creating incentives to overstate tax to secure a financial return compared with commercial savings rates.

HMRC treats interest in line with other tax authorities and financial institutions by having a differential between the interest it pays, and the interest charged. This differential is currently 5ppt, with both Repayment Interest and Late Repayment Interest linked to the Bank of England base rate that reflects wider economic conditions and gives transparency for those tracking its rates.

In setting rates, HMRC weighs up various factors to provide transparency and ensure fairness for those who do pay on time, the cost to the public purse of delayed payment, and increasing the tax debt.

The differential between late payment and repayment rates supports appropriate compliance incentives within the tax system. This makes sure that HMRC does not become the lender of first preference to some customers, impairing its ability to efficiently collect taxes and fund public services.

This also ensures taxpayers do not benefit from delaying payment by effectively borrowing from HMRC at lower rates than are available through commercial short‑term lending. It also avoids creating incentives to overstate tax to secure a financial return compared with commercial savings rates.