HMRC penalty and interest rates: what you will be charged
The charges for late payments and how to avoid penalties - explained
HMRC charges interest on all late tax payments at the Bank of England base rate plus 4%. As of 2026, this is 7.75%, accruing daily from the day after payment was due.
Self Assessment late payment
- 5% penalty on unpaid tax 30 days after the 31 January deadline
- A further 5% after 6 months
- A further 5% after 12 months
VAT late payment
- 3% after 15 days, additional 3% after 30 days, daily rate equivalent to a 10% annual rate beyond 30 days, plus interest at the Bank of England base rate plus 4%
Corporation Tax late payment
Interest only (no separate penalty), but at 7.75% this adds up quickly on larger liabilities.
How to avoid all penalties
The most effective way to avoid HMRC penalties is to maintain accurate records, approve returns promptly when we send them, and pay on time. All penalties and interest are avoidable. None are negotiable, except in genuine cases of reasonable excuse.
💡 Good to know: HMRC does accept reasonable excuse appeals in some circumstances — for example a serious illness or bereavement. However, these are assessed strictly and refused in most cases. Do not rely on this route. Contact us as soon as any payment difficulty arises.
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