---
title: Will I Get Charged Interest and a Penalty for Late Payment?
description: "**Last updated:** 14 October 2026 ## Will you be charged interest and a penalty for paying tax late? Yes. HMRC charges late payment interest from the day after the due date until you pay, currently at 7.75% a year (the…"
url: "https://accotax.co.uk/knowledgebank/will-i-get-charged-interest-and-a-penalty-for-late-payment/"
updated: "2026-10-16"
category: General Information
tags:
  - Hmrc
---

# Will I Get Charged Interest and a Penalty for Late Payment?

**Last updated:** 14 October 2026

## Will you be charged interest and a penalty for paying tax late?

Yes. HMRC charges late payment interest from the day after the due date until you pay, currently at 7.75% a year (the Bank of England base rate of 3.75% plus 4%). For Self Assessment, late payment penalties are also added if tax is still unpaid 30 days, 6 months and 12 months after the due date. Interest is not a penalty and can't be appealed, but penalties can be cancelled if you had a reasonable excuse or agree a Time to Pay arrangement in time.

## Self Assessment late payment penalties

| Unpaid after | Penalty |
| --- | --- |
| 30 days | 5% of the tax unpaid |
| 6 months | A further 5% |
| 12 months | A further 5% |

Payments on account don't attract penalties, only interest.

## Making Tax Digital for Income Tax

From April 2026, taxpayers in MTD for Income Tax are under a new late payment penalty regime, like VAT:

- No penalty if paid within 15 days of the due date
- 3% of the tax unpaid at day 15
- A further 3% of the tax unpaid at day 30
- A daily penalty of 10% a year on the outstanding amount from day 31

## Example

Owen owes £8,000 for 2025/26, due on 31 January 2027. He pays on 15 April 2027. Interest is charged at 7.75% for 74 days, around £126. As the tax was unpaid at 30 days, a 5% penalty of £400 also applies. If he'd set up a Time to Pay arrangement before day 30, the penalty could have been avoided.

## Time to Pay

- Set up online for Self Assessment debts up to £30,000
- Interest still applies, but penalties are usually suspended
- Larger debts need a call with HMRC
- HMRC expects you to pay as much as you can afford

## Other taxes

- **VAT:** penalty and interest regime from 2023, similar to MTD above
- **Corporation tax:** interest from the due date; no fixed late payment penalties, but HMRC can enforce
- **PAYE:** penalties for repeated late payments in a tax year, from 1% to 4% of the amount late

## Interest on repayments

If HMRC repays tax you overpaid, it pays repayment interest at the base rate minus 1%, currently 2.75%, with a minimum of 0.5%.

## Reasonable excuse

HMRC may cancel penalties if you couldn't pay because of a serious illness, bereavement or an unexpected event outside your control. Lack of money is not usually accepted on its own.

## Common mistakes

- Waiting until after day 30 to contact HMRC about a payment plan
- Paying the balancing payment but forgetting the first payment on account due on the same day
- Using the wrong payment reference, so the money is not matched to your account
- Assuming a pending appeal means you can delay paying tax that is not in dispute

If you think you will struggle to pay, call HMRC or set up a plan online before the due date. That keeps penalties to a minimum.

## Frequently asked questions

### Is late payment interest tax-deductible?

No, not for individuals.

### Can I appeal interest?

No, only penalties.

### Does HMRC charge interest on penalties?

Yes, if they're paid late.

### When does interest start?

The day after the payment was due.

Related: [the £100 late return penalty](https://accotax.co.uk/knowledgebank/will-i-be-charged-the-100-penalty-for-a-late-tax-return/), [late VAT payments and interest](https://accotax.co.uk/knowledgebank/vat-late-filing-penalties/) and [HMRC's interest charges](https://accotax.co.uk/knowledgebank/taxman-collects-more-than-400m-in-interest-charges/).

## Talk to Accotax

Want this handled for you? Our team at [Accotax](https://accotax.co.uk/) can help with tax payments and HMRC. See our [small business accountants](https://accotax.co.uk/accountants-for-small-businesses/) service, or [contact us](https://accotax.co.uk/contact/) for a free, no-obligation quote.

This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.