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HMRC internal manual

Compliance Handbook

Interest: Late payment interest: Special provisions: Special provisions for amount: IT payments on account and overpayments

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.

A special provision changes the general rule, see CH141120, and applies where payments on account are due from a person who is also entitled to a repayment of certain overpayments. Late payment interest is charged in this situation under the general rule where the original payments on account are paid late. The special provision quantifies the amount of tax on which late payment interest is charged.

The overpayments covered by this special provision are those overpayments for that year of assessment from a self-assessment return being made and the liability for the year established, whether after an enquiry or not.

Late payment interest is only payable on the amount by which each of the payments on account paid late exceeds 50% of the overpayment.

To work out the amount of the overpayment for the purposes of calculating the late payment interest, we

  • ignore any amount that has been paid on account that is in addition to the two required payments, and
  • ignore any amount payable as capital gains tax.

See CH142300 for an example.