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Today, 5% of unpaid tax is added at 30 days, 6 months and 12 months, plus 7.75% yearly interest since 9 January 2026. Making Tax Digital users, and from April 2027 everyone filing a personal return, move to new penalties.
Paying Self Assessment late costs you twice: interest, which compensates HMRC for the wait, and penalties, which are there to encourage paying on time. HMRC's manual is clear that interest is not a penalty. The rules below follow GOV.UK and HMRC's manuals as checked on 16 October 2026.
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The current late payment penalties
These apply to your 2025-26 bill, due by 31 January 2027, whether or not you have joined Making Tax Digital (MTD).
| Tax still unpaid at | Penalty |
|---|---|
| 30 days late | 5% of the tax unpaid |
| 6 months late | Another 5% of the tax unpaid |
| 12 months late | Another 5% of the tax unpaid |
Each penalty is worked out on what is still unpaid at that point, so paying part of the bill reduces the later ones. HMRC sends a penalty notice, and the penalty must be paid within 30 days of the date on it. If you have a reasonable excuse, you can appeal.
How late payment interest works
Interest runs from the due date until the day you pay. It applies to balancing payments and to payments on account, and it runs even when the due date falls on a weekend.
The rate is set in law at the Bank of England base rate plus 4%. With the base rate at 3.75%, it has been 7.75% a year since 9 January 2026. The Bank held the base rate at 3.75% on 17 September 2026, and its next decision is due on 5 November 2026, so check the rate before you rely on it. If you overpay, HMRC pays repayment interest at 2.75%.
A worked example
A landlord's 2025-26 balancing payment of £4,000 is due on 31 January 2027, and none of it is paid for over a year.
| Point reached | Penalty added | Penalties so far |
|---|---|---|
| 30 days late | £200 | £200 |
| 6 months late | £200 | £400 |
| 12 months late | £200 | £600 |
On top of that, interest at 7.75% on £4,000 is £310 a year, or about 85p a day, if the rate stays the same. Paying within 30 days avoids the penalties entirely, though interest still runs for those days. This is an example only.
The new penalties under Making Tax Digital
If you are in MTD, new late payment penalties apply from the tax year you join. They are not points based: each late payment is penalised on its own. They do not apply to payments on account, but interest does.
| How late | 2026-27 tax year | 2027-28 tax year |
|---|---|---|
| Up to 15 days | No penalty | No penalty |
| 16 to 30 days | 3% of the tax owed at day 15, or none in your first year | 4% of the tax owed at day 15, or none in your first year |
| 31 days or more | 3% at day 15, 3% at day 30, then 10% a year charged daily | 4% at day 15, 4% at day 30, then 10% a year charged daily |
The 10% yearly charge runs from day 31 until the tax is paid, for up to 2 years. In your first year of the new penalties, you have 30 days instead of 15 to pay in full or contact HMRC about a payment plan before penalties start. You only get that 30-day period once: if you volunteered for MTD before you had to join, you keep 15 days.
On the 2027-28 figures, outside your first year, a £4,000 bill still unpaid at day 30 would carry £160 at day 15 and another £160 at day 30, then 10% a year, which is £400 a year or about £1.10 a day, plus interest.
GOV.UK says that from April 2027 the new penalties will apply to everyone who submits a personal Self Assessment tax return, not only people in MTD. HMRC's Tax Agent's Handbook gives the date as 6 April 2027 for all Income Tax Self Assessment customers. Our guide to Making Tax Digital penalties covers the points system for late returns and updates.
What this means for you
For your 2025-26 bill, the date that matters most is 30 days after 31 January 2027: that is when the first 5% lands. If you cannot pay in full, contact HMRC before then. HMRC's manual says that once a plan is agreed, no late payment penalty arises on that amount from the date you asked, as long as you keep to it. Interest still runs, so pay off what you can.
If you are in MTD from April 2026, your 2026-27 bill, due 31 January 2028, is under the new table. If that is your first year under the new penalties, you get the 30-day allowance.
Steps to keep the cost down
- Check what you owe and when in your HMRC online account.
- Pay what you can by the deadline, using a method that reaches HMRC in time. See how to pay your Self Assessment tax bill.
- If you cannot pay it all, ask HMRC for a payment plan before the first penalty date. See paying in instalments.
- Keep to every instalment, or the penalty can come back.
- If something outside your control stopped you paying, consider an appeal.
- Pay any penalty within 30 days of the notice, or interest is charged on it too.
The free MTD check shows whether Making Tax Digital starts for you in April 2027. There are more guides in the trades section and the landlord section.
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Questions people ask
What is HMRC's late payment interest rate now?
7.75% a year, in force since 9 January 2026. It is set at the Bank of England base rate plus 4%, so it changes when the base rate changes.
Is interest charged on late payments on account?
Yes. HMRC's manual says interest arises on any tax paid late, including payments on account. Under the new Making Tax Digital penalties, payments on account do not get a late payment penalty, but interest still applies.
Can I avoid a late payment penalty if I cannot pay?
Contact HMRC before the penalty date to agree a payment plan. HMRC's manual says no late payment penalty arises on the amount covered from the date you asked, as long as you keep to the plan.
Do the new penalties apply to me if I am not in Making Tax Digital?
GOV.UK says that from April 2027 the new penalties will apply to everyone who submits a personal Self Assessment tax return. Your 2025-26 bill, due 31 January 2027, is under the current 5% rules.
Is there interest on a penalty?
Yes, if it is paid late. A penalty must be paid within 30 days of the date on the penalty notice, and interest is charged after that.
Sources
- Self Assessment tax returns: Penalties (GOV.UK)
- HMRC interest rates for late and early payments (GOV.UK)
- Penalties for Making Tax Digital for Income Tax (GOV.UK)
- SALF305: interest charged on late payments of tax (HMRC internal manual)
- SALF308A: late payment penalties on unpaid Income Tax (HMRC internal manual)
- Pay a Self Assessment penalty (GOV.UK)
- The Tax Agent's Handbook: keeping up to date (GOV.UK)
- Interest rates and Bank Rate: our latest decision (Bank of England)
This is general information to help you understand the rules. It isn't tailored to your circumstances, so check your own position before acting on it.
Righto Tax is a trading name of NJG Consultancy Ltd, registered in England and Wales, company number 16095900. Registered office: Jubilee House, East Beach, Lytham St Annes, FY8 5FT.
What happens next
- Use the free Making Tax Digital checker to see your own start date and deadlines.
- See what Righto Tax for Trades does for you, and join the waitlist.
- Questions about this page? Email hello@rightotax.co.uk.