HMRC Late Payment Interest Calculator

How HMRC Late Payment Interest Works

When you pay tax late in the UK, HMRC charges interest on the amount outstanding. This is not a penalty in the legal sense — it's statutory interest designed to compensate HMRC for the delay and encourage timely payment. The rate is set quarterly and is tied to the Bank of England base rate.

Current HMRC Interest Rates

HMRC uses two different rates depending on the scenario:

• Late payment interest — Base rate + 2.5%. This applies when you pay tax after the deadline. With the base rate at 4.5%, the late payment rate is currently 7%.
• Repayment interest — Base rate minus 1%, with a minimum of 0.5%. This applies when HMRC owes you money (e.g. overpaid tax). At the current base rate, repayment interest is 3.5%.

The Calculation Formula

HMRC uses simple daily interest, not compound interest. The formula is:

Interest = Amount × (Rate ÷ 365) × Days

Interest runs from the day after the due date until the day you actually pay. For example, tax due on 31 January and paid on 15 March incurs interest for every day from 1 February to 15 March inclusive.

Self-Assessment Deadlines

If you file a self-assessment tax return for the year ending 5 April, your return and any tax owing must be submitted online by 31 January the following year. Payments on account (advance instalments for the next year) are due on 31 January and 31 July. Missing these dates triggers late payment interest from the day after the deadline.

Frequently Asked Questions

What is the HMRC late payment interest rate?

The HMRC late payment interest rate is the Bank of England base rate plus 2.5%. It is reviewed and updated quarterly. As of February 2026, with the base rate at 4.5%, the late payment rate is 7%. Use the calculator above to see how much interest you would pay on a specific amount.

How is HMRC interest calculated?

HMRC uses simple daily interest: (amount owed × annual rate ÷ 365) × number of days late. There is no compounding. The rate is applied to each day from the day after the due date until the day you pay. Our calculator above performs this calculation instantly for any amount and date range.

When are self-assessment tax payments due?

For the tax year ending 5 April, online returns and any tax owing must be submitted by 31 January the following year. So for 2024/25 (year to 5 April 2025), the deadline is 31 January 2026. Payments on account are due on 31 January and 31 July. Late payment interest runs from the day after each relevant deadline.

Can I reduce HMRC interest by paying early?

Yes. Interest is calculated daily, so the sooner you pay, the less interest you accrue. Making a partial payment also reduces the amount on which interest is charged from that day onwards. Paying in full as soon as possible minimises the total interest due.