What interest will I be charged if I pay my tax late?

It's really important to try to pay your taxes on time. HM Revenue & Customs (HMRC) will charge interest on the late paid tax.

The current late payment and repayment interest rates applied to the main taxes HMRC charges and pays interest on are:

• late payment interest rate — 7.75% from 22nd August 2023
• repayment interest rate — 4.25% from 22nd August 2023

As well as being aware of the fines and penalties which apply when a tax return is submitted late, you should also remember that HMRC also charge penalties for late payment of tax as follows:

• 30 days late – 5% of tax due.
• More than 5 months after the first penalty – 5% of outstanding tax due at that date.
• More than 11 months after the first penalty – 5% of outstanding tax due at that date.

Where you can't pay your tax bill on time in full, you may be able to set up a ‘Time to Pay’ payment plan to pay it in instalments, and this can help mitigate your exposure to penalty charges. Early contact with HMRC is advisable to prevent enforcement action being taken against you.

If you’re struggling to keep on top of your tax affairs, please contact us and we would be happy to take care of them on your behalf – leaving you to concentrate on running your business. 

Date published 10 Jan 2023 | Last updated 23 Apr 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.