Calculate Your HMRC Late Payment Interest
Frequently Asked Questions
What interest rate does HMRC charge on late payments?
HMRC charges interest at the Bank of England base rate plus 2.5%. In 2026, with the base rate at approximately 4.75%, the late payment interest rate is around 7.25% per annum.
Are there penalties as well as interest on late tax payments?
Yes. HMRC also charges penalties: 5% of the unpaid tax if it remains unpaid 30 days after the due date, a further 5% at 6 months, and another 5% at 12 months. These are on top of the daily interest charge.
When does HMRC start charging interest on late payments?
Interest starts accruing from the day after the payment due date. For Self Assessment tax returns the main deadline is 31 January. PAYE underpayments collected via Self Assessment follow the same rule.
Can HMRC waive late payment interest?
HMRC can suspend penalties in limited circumstances (for example if you have a Time to Pay arrangement in place), but interest itself is statutory and very rarely waived. Always contact HMRC as soon as possible if you cannot pay.
How is HMRC late payment interest calculated daily?
The annual interest rate is divided by 365 to give a daily rate. For example, at 7.25% p.a. the daily rate is approximately 0.01986%. This is applied to the outstanding tax balance each day until payment is received.