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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
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Interest: Late Payment Interest: Overview

You must check whether, and from which date, the FA 2009 interest rules apply to the tax or duty you are dealing with. See CH140160 for full details.

HMRC charges late payment interest when a person makes a payment late.

Late payment interest is a simple and consistent interest charge on late payments of taxes, duties and penalties.

Late payment interest is not a penalty, but is recompense for the loss of use of the money.

Late payment interest must be paid gross. The payer cannot deduct income tax from it.

Eventually, late payment interest will apply to all taxes, duties (other than customs duties), penalties and surcharges. However, the interest provisions currently only apply to the taxes, and associated penalties, listed at CH140160. This is because they are the only taxes for which there is an appointed day from which the rules apply.

Late payment interest is not payable on late payment interest. Therefore, the interest charged is simple interest, not compound interest.

Interest is specifically excluded from late payment interest. This means that interest is not paid or payable on interest.

There is a general rule, which is modified in particular circumstances by special provisions.

General rule

Late payment interest runs from the late payment interest start date until the late payment interest end date.

For most late payments, the late payment interest start date is the due date for payment of the amount concerned.

The late payment interest end date is usually the date on which payment is made.

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Special provisions

In particular circumstances there are special provisions that change the late payment interest start dates, and identify the amount on which late payment interest is calculated, see CH142000+.

FA09/S101

FA09/SCH53