The Late Payment Interest Calculator estimates the interest that may arise when UK tax is paid after its due date. It uses the outstanding amount, overdue period and applicable annual interest rate to produce an illustrative daily interest calculation.

HMRC late payment interest normally runs from the day after the payment deadline until the date the amount is paid. Where the rate changes or part of the debt is paid during that period, the calculation should be divided into separate sections.

The result estimates interest rather than late filing or late payment penalties. Penalties are separate charges and can apply in addition to interest under the rules for the relevant tax.

How Does the Late Payment Interest Calculator Work?

The calculator applies an annual interest rate to the unpaid amount for the number of days it remains overdue.

A simplified calculation uses the following formula:

Unpaid amount × annual interest rate × overdue days ÷ days in the year

For an ordinary year, the divisor is generally 365. A period falling within a leap year may require 366 days for the relevant part of the calculation.

HMRC interest accrues daily and is generally calculated on a simple rather than compound basis. This means interest is charged on the outstanding tax or qualifying penalty, not on late payment interest that has already accrued.

If the interest rate or unpaid balance changes, calculate each period separately and add the results together.

HMRC publishes its current and historical late payment interest rates.

What Do the Calculator Results Mean?

The results show the estimated interest accrued during the entered period and the combined amount of tax and interest.

Outstanding tax: This is the overdue principal amount on which the estimate is based.

Overdue days: This represents the period from the relevant interest start date to the payment date or selected calculation date.

Annual interest rate: This is the percentage applied for the selected period. HMRC rates can change following changes to the Bank of England base rate.

Estimated daily interest: This indicates how much interest accrues for each day that the entered balance remains outstanding at the selected rate.

Estimated interest: This is the calculated interest for the overdue period. It excludes penalties, debt recovery costs and interest arising under another tax-specific rule.

Estimated total: This combines the original unpaid amount with the estimated interest. It does not include payments, credits or additional liabilities not entered into the calculator.

What Is an Illustrative Late Payment Interest Calculation?

This illustrative example shows how interest may be calculated on £10,000 of tax paid 60 days late at an annual rate of 7.75%.

Illustrative example: A taxpayer has £10,000 of qualifying tax outstanding for 60 days. The annual late payment interest rate remains 7.75% throughout the period.

The example assumes a 365-day year, no rate change, no part-payment, no credit or set-off, no special interest provision and no separate penalty.

Calculation	Illustrative working	Amount
Outstanding tax	Entered principal	£10,000
Annual interest	£10,000 × 7.75%	£775.00
Daily interest	£775 ÷ 365	£2.12
Interest for 60 days	£10,000 × 7.75% × 60 ÷ 365	£127.40
Estimated total	£10,000 + £127.40	£10,127.40

Based on these assumptions, the calculator would estimate £127.40 of late payment interest and a total amount of £10,127.40.

If the tax remained unpaid, interest would continue to accrue. At the same rate and balance, each additional day would add approximately £2.12, subject to rounding and any future rate change.

What Is the Current HMRC Late Payment Interest Rate?

The main HMRC late payment interest rate is 7.75% from 9 January 2026, but users should verify the rate applying to their actual overdue period.

The rate applying to many main taxes and duties is linked to the Bank of England base rate. From 6 April 2025, the statutory formula for the main late payment rate has generally been:

Bank of England base rate + 4 percentage points

The 7.75% rate from 9 January 2026 reflects a 3.75% Bank Rate plus four percentage points.

The rate is time-sensitive. A later Bank Rate decision can lead HMRC to announce a revised rate with its own effective date. Do not assume that the rate in force when the tax became due will continue until payment.

Some Corporation Tax quarterly instalment payments and specialised liabilities can use different effective dates or interest arrangements. Check the table for the relevant tax before completing the calculation.

When Does Late Payment Interest Start and End?

Interest generally covers each day from immediately after the tax was due until and including the effective date of payment.

If tax is due on 31 January and HMRC receives payment on 1 February, the amount will normally attract one day of late payment interest.

The relevant end date is the date on which HMRC treats the payment, credit or set-off as effective. The date on which the taxpayer instructs a bank to make the payment may not be the same as the date HMRC receives it.

Payment methods take different amounts of time. A payment initiated near the deadline may still be late if it does not reach HMRC by the required date.

Special rules can alter the interest start date for particular assessments, amendments, reliefs and taxes. The date displayed in an HMRC account should be checked where it differs from the ordinary payment deadline.

How Should Interest Be Calculated When the Rate Changes?

Divide the overdue period at each rate-change date, calculate the interest for each section and add the results.

For example, assume £8,000 remains unpaid for 50 days, with 20 days at 8% and 30 days at 7.75%.

Period	Illustrative calculation	Interest
20 days at 8%	£8,000 × 8% × 20 ÷ 365	£35.07
30 days at 7.75%	£8,000 × 7.75% × 30 ÷ 365	£50.96
Total estimated interest	£35.07 + £50.96	£86.03

This example is illustrative and assumes a 365-day year, no payments or credits during either period, and ordinary simple interest treatment.

Applying the latest rate retrospectively to the whole delay can overstate or understate the result. Use each rate from its official effective date.

What Happens When Part of the Tax Is Paid?

A part-payment normally reduces the balance on which interest accrues from the payment’s effective date.

Calculate interest on the original balance up to the part-payment date. Then calculate interest on the reduced balance from that date until the remaining tax is paid.

For example, if £10,000 is overdue for 20 days before a £6,000 payment, the first period uses £10,000. The next period generally uses the remaining £4,000, subject to how HMRC allocates the payment.

Several part-payments require several calculation periods. Each section may have a different:

outstanding balance;
number of days;
annual interest rate; or
days-in-year divisor.

The calculator may provide only a simplified estimate where it accepts one amount and one payment period. HMRC’s calculation will be more precise when several account transactions are involved.

Does Interest Continue During a Time to Pay Arrangement?

Late payment interest normally continues on the outstanding balance while tax is being paid through a Time to Pay arrangement.

An accepted arrangement can help manage payment and may affect certain late payment penalties, but it does not ordinarily freeze interest.

Each instalment reduces the balance used for future interest once HMRC receives and allocates it. The interest estimate should therefore reflect the instalment dates and remaining balances.

Taxpayers who cannot pay in full should contact HMRC promptly. Agreeing an arrangement before a penalty trigger may protect against some penalties under the relevant regime, but interest will generally continue until the debt is cleared.

Which Taxes Can Attract HMRC Late Payment Interest?

Late payment interest can apply to several UK taxes and duties, although the starting date and special rules depend on the liability.

The main published HMRC rate can apply to liabilities including:

Income Tax;
Self Assessment payments on account and balancing payments;
National Insurance contributions;
Capital Gains Tax;
Corporation Tax, subject to its detailed rules;
VAT for accounting periods beginning on or after 1 January 2023;
Stamp Duty Land Tax;
Stamp Duty and Stamp Duty Reserve Tax; and
certain tax penalties that have themselves become overdue.

This list does not mean that every liability follows an identical calculation. Quarterly instalment payments, older VAT periods, disputed assessments and other specialised charges may require different treatment.

Commercial invoice interest, court judgment interest, mortgage interest and consumer-credit charges are outside the ordinary HMRC calculation and should not be estimated using an HMRC rate unless the relevant rules expressly require it.

How Does Late Payment Interest Apply to Self Assessment?

Self Assessment interest can accrue on unpaid balancing payments and payments on account from their respective payment deadlines.

A balancing payment is normally due on 31 January following the end of the tax year. The first payment on account is generally due on the same date, with the second due on 31 July.

Each amount has its own interest start date. Combining the balances and using one date may produce an incorrect estimate.

Interest is separate from the standard Self Assessment late payment penalties that may arise when tax remains unpaid at the applicable trigger dates.

Filing a return late can also create separate fixed, daily and tax-geared filing penalties. The Late Payment Interest Calculator does not normally include those filing charges.

How Does Late Payment Interest Apply to VAT?

For VAT periods beginning on or after 1 January 2023, interest generally runs from the first day a payment is overdue until it is paid in full.

Interest may arise on unpaid amounts from:

a VAT return;
an amendment or correction;
an HMRC VAT assessment;
a missed VAT payment on account; or
an overdue VAT penalty.

VAT late payment penalties are separate and can depend on how long the amount remains unpaid. Paying within an applicable penalty-relief period may prevent a penalty without necessarily removing interest.

Older VAT accounting periods may fall under the former default surcharge and interest rules. Confirm the period start date before using the current calculation.

How Does Late Payment Interest Apply to Corporation Tax?

Corporation Tax paid after its normal due date can attract daily interest until HMRC receives payment.

For many smaller companies, Corporation Tax is normally due nine months and one day after the accounting period ends. The Company Tax Return deadline is normally 12 months after the period ends, so payment can be due before the return.

Large and very large companies may pay Corporation Tax by quarterly instalments. Those payments can have different due dates and interest-effective dates from an ordinary single payment.

Late filing penalties for the Company Tax Return are separate from interest on unpaid Corporation Tax. A company can therefore owe interest even where its return was filed on time.

Companies estimating the underlying liability can use the Corporation Tax Calculator before checking the payment timetable.

Is Late Payment Interest the Same as a Penalty?

No. Interest compensates HMRC for receiving money late, while penalties are separate sanctions for failing to meet filing or payment obligations.

Interest can begin as soon as tax becomes overdue, even where no percentage-based penalty has yet been triggered.

A reasonable-excuse appeal that removes a late payment penalty does not automatically remove statutory interest. Interest generally follows the underlying amount and period of delay.

Different taxes use different penalty structures. Possible charges include:

fixed late filing penalties;
daily filing penalties;
percentage-based late payment penalties;
points-based submission penalties;
failure-to-notify penalties; and
inaccuracy penalties.

Do not add a penalty to the calculator result unless the relevant conditions and trigger date have been established.

Can HMRC Late Payment Interest Be Appealed?

Statutory interest is not generally appealable in the same way as a penalty, but the underlying amount, dates or calculation may be disputed.

A taxpayer may be able to object where:

HMRC used the wrong payment due date;
a payment or credit was allocated incorrectly;
the effective payment date is wrong;
an incorrect interest rate was applied;
the underlying tax liability has been reduced; or
an HMRC error or unreasonable delay contributed to the charge.

Evidence can include payment confirmations, bank records, account statements, amended assessments and correspondence with HMRC.

For some taxes, HMRC may require the underlying tax to be paid before considering an objection to the interest calculation.

A successful appeal against a separate penalty does not necessarily affect interest on tax that was genuinely paid late.

What Factors Can Affect the Interest Estimate?

The tax type, due date, effective payment date, rate changes, part-payments and account credits can all alter the final interest charge.

Outstanding amount: Interest is calculated on the balance remaining unpaid.
Interest start date: This is normally linked to the statutory payment deadline.
Effective payment date: HMRC uses the date it treats the payment or set-off as made.
Annual rate: The prescribed rate can change during the overdue period.
Leap years: A 366-day divisor may apply to the relevant period.
Part-payments: Each payment can reduce the balance used for later days.
Credits and set-offs: An HMRC credit can end or reduce interest from its effective date.
Tax-specific provisions: Special rules can change the amount or dates used.
Rounding: HMRC’s daily and transaction-level rounding may differ slightly from a simple estimate.
Time to Pay: Interest generally continues on instalment balances.

The calculator applies the figures entered but cannot review HMRC’s transaction history or confirm how payments were allocated.

What Common Late Payment Interest Mistakes Should Be Avoided?

Common mistakes include using one rate for the whole period, counting the wrong dates and calculating interest on the original balance after a part-payment.

Using the current rate retrospectively

The current interest rate should not automatically be applied to days before its effective date.

Divide the delay at each historical rate change and calculate the periods separately.

Starting from the wrong date

Interest normally begins immediately after the statutory payment deadline, not after HMRC issues a reminder.

Confirm the original due date for the tax or instalment.

Using the date the payment was instructed

The effective payment date may be later than the date a bank transfer or Direct Debit was initiated.

Allow for the processing time of the chosen payment method.

Ignoring part-payments

Interest should normally be recalculated on the reduced balance after each effective payment.

Do not continue charging interest on an amount HMRC has already received and allocated.

Compounding the interest

Main HMRC late payment interest is generally simple rather than compound.

Do not add accrued interest to the tax principal for the next day’s calculation unless a specific rule requires different treatment.

Assuming interest includes penalties

Interest and penalties are distinct charges.

Review the relevant filing and payment regime separately before estimating the total exposure.

What Are the Calculator’s Important Limitations?

The calculator provides a simplified interest estimate and cannot reproduce every rate period, account allocation or tax-specific adjustment.

The result may differ from HMRC where:

the rate changes during the overdue period;
payments or credits are applied on several dates;
a leap year spans part of the calculation;
HMRC uses a different effective payment date;
a payment is reallocated between liabilities;
an assessment is amended or reduced;
a special interest start date applies;
Corporation Tax quarterly instalments are involved;
the VAT period began before 1 January 2023;
penalties or other debts are also outstanding; or
the calculation covers a historical regime.

The calculator does not make a payment, stop interest accruing, establish a Time to Pay arrangement or confirm the balance shown in an HMRC account.

Which Related Calculators May Be Useful?

Related calculators can help estimate the underlying tax before interest is considered.

Sole traders can use the Self-Employed Tax Calculator to estimate Income Tax and Class 4 National Insurance before reviewing the applicable Self Assessment payment dates.

Companies can use the Corporation Tax Calculator to estimate Corporation Tax before considering its normal or quarterly payment timetable.

VAT-registered businesses can use the VAT Calculator to add or remove VAT from an amount. Its result does not establish the VAT return liability or payment deadline.

This Late Payment Interest Calculator provides estimates only. Actual interest depends on the tax type, statutory due date, effective payment date, outstanding balances, applicable rates, reliefs and HMRC account allocations. Rates and circumstances can change, and professional tax advice may be appropriate where several payments, historic periods, disputed liabilities or special interest rules are involved.

Late Payment Interest Calculator UK

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