HMRC Late Payment Interest Calculator
Calculate penalties and interest on late tax payments under HMRC’s MTD ITSA rules. Covers the 2026/27 first-year grace period, Penalty A & B, daily charges, and the current interest rate.
About HMRC late payment interest & penalties
How does HMRC calculate late payment interest?▾
HMRC charges interest at the Bank of England base rate plus 4% — currently 8.75% per annum (verified May 2025). Interest is calculated daily on the outstanding amount and runs from the day after the payment deadline until the balance is cleared in full.
What is the HMRC late payment penalty?▾
Under the MTD ITSA rules from 2026/27, there is no penalty during the grace period (30 days in the first year, 15 days from 2027/28). After the grace period, Penalty A applies at 3–4% of the unpaid amount. After 30 days, Penalty B adds a further 3%. From day 31, a daily charge of 10% per annum also accrues. Payments on account attract interest only — no late payment penalty.
Is there a grace period for late HMRC payment?▾
Yes. In the first year of MTD (2026/27), there is a 30-day grace period before any late payment penalty applies. From 2027/28 onwards, the grace period is 15 days. Interest accrues from day 1 regardless of the grace period.
What happens if I cannot pay my HMRC tax bill?▾
Contact HMRC as soon as possible to set up a Time to Pay arrangement. Once a plan is agreed, late payment penalties stop accruing from the date of your first contact. Interest continues to run until the balance is paid. A tax specialist can negotiate this on your behalf.