Miss a payment on account and HMRC charges late payment interest, 7.75% a year from 9 January 2026, from the due date until you pay. Penalties only start if it is still unpaid after the balancing payment is due.
Payments on account are the two advance payments towards your tax bill, due by 31 January and 31 July. If you are new to them, start with our guide to what payments on account are. This page is about what happens when one is missed. The rules follow GOV.UK and HMRC's manuals, checked on 17 October 2026.
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Interest starts on the due date
HMRC's manual says interest arises automatically on any tax paid late, and lists payments on account first. For payments on account, interest runs on the amount outstanding from the due date until the date you finally pay. It runs even if the due date falls on a weekend.
GOV.UK sets the late payment interest rate at the Bank of England base rate plus 4%. The base rate is 3.75% today, and HMRC's current rate is 7.75% from 9 January 2026. When the base rate moves, the interest rate moves with it.
Penalties work differently
Under the current Self Assessment rules, GOV.UK lists penalties of 5% of the tax unpaid at 30 days, 6 months and 12 months, plus interest. HMRC's manual says these penalties are payable on tax shown as due in a self assessment that is not covered by any payment on account or balancing payment made. The first 5% arises when a payment on account or balancing payment is still unpaid more than 30 days after the due date for that year's balancing payment. So a late payment on account gets interest straight away, and a penalty only if it is still unpaid by then.
The new penalties for Making Tax Digital (MTD) for Income Tax are clearer still. GOV.UK says late payment penalties apply to a balancing payment and to amounts due after an amendment or assessment, and "do not apply to any payments on account". It also says there are no changes to how late payment interest works.
| Payment on account (31 January, 31 July) | Balancing payment (31 January) | |
|---|---|---|
| Late payment interest | Yes, from the due date | Yes, from the due date |
| Current Self Assessment penalty | None at first. 5% if still unpaid 30 days after the 31 January balancing payment date, then again at 6 and 12 months | 5% of tax unpaid at 30 days, 6 months and 12 months |
| New MTD penalty, 2026-27 tax year | No | 3% at day 15, 3% at day 30, then 10% a year from day 31. In your first year, none if paid within 30 days, but both 3% charges if later |
| New MTD penalty, 2027-28 tax year | No | 4% at day 15, 4% at day 30, then 10% a year from day 31. In your first year, none if paid within 30 days, but both 4% charges if later |
GOV.UK says the new penalties apply from the tax year you join MTD, and from April 2027 to everyone who submits a personal Self Assessment tax return. In your first year of the new penalties you get 30 days from the due date to pay or set up a payment plan before penalties start. After that it is 15 days.
Why a missed payment can still come back
The balancing payment is worked out by deducting the payments on account you have made from the total tax you owe. So a payment on account you never make is added to the balancing payment due on 31 January after the tax year. Under the current rules, HMRC's manual says it gets the 5% penalty if it is still unpaid 30 days after that date. Under MTD, in our reading, the late payment penalty on the balancing payment covers it too. Either way, that is on top of the interest that has been running since the original due date.
What this means for you
A missed payment on account is not a disaster, but it is not free either. Interest at 7.75% builds daily, and the shortfall lands in your January bill. If you expect a lower bill, reduce the payments properly rather than skip them. Our guide on how to reduce payments on account explains form SA303. GOV.UK says if you reduce them and your bill turns out higher, you pay interest on the difference.
For the full penalty picture, see Self Assessment late payment penalties and interest.
Steps if you have missed a payment on account
- Check your Self Assessment statement or online account to see what is owed and since when.
- Pay as soon as you can. Interest stops when the tax is paid.
- If your profit or rent has dropped, claim to reduce the payments online or with form SA303 by 31 January after the end of the tax year.
- If you cannot pay, contact HMRC about a payment plan, also called Time to Pay. HMRC will check it is affordable.
- Once you are up to date, consider a Budget Payment Plan to pay weekly or monthly by Direct Debit towards your next bill. GOV.UK says you must be up to date with your last bill to set one up.
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Questions people ask
Is there a penalty for missing a payment on account?
Not straight away. Under the current rules, HMRC's manual says a 5% penalty arises only if a payment on account is still unpaid more than 30 days after that year's balancing payment due date. HMRC's guidance on the Making Tax Digital penalties says late payment penalties do not apply to payments on account. Interest applies from the due date either way.
How much interest will HMRC charge?
HMRC's late payment interest rate is 7.75% a year from 9 January 2026. It is the Bank of England base rate plus 4%, and the base rate is 3.75% on 17 October 2026. Interest runs from the due date until you pay.
Can a missed payment on account lead to a penalty later?
Yes. The balancing payment is your total tax minus the payments on account you made, so anything you skipped is added to the balancing payment due on 31 January. Under the current rules, HMRC's manual says 5% is charged if it is still unpaid 30 days after that date. Under MTD, in our reading, the late payment penalty on the balancing payment covers it too.
I think my bill will be lower. Can I just skip the payment?
It is better to reduce it formally, online or with form SA303, by 31 January after the end of the tax year. GOV.UK says if you reduce the payments and your bill turns out higher, you are charged interest on the difference.
What if I cannot afford the payment?
Contact HMRC. GOV.UK says you might be able to set up a payment plan, also known as a Time to Pay arrangement, and HMRC will check it is affordable. There is no fixed time limit on how long a plan can last.
Sources
- Understand your Self Assessment tax bill: Payments on account (GOV.UK)
- Self Assessment tax returns: Penalties (GOV.UK)
- Penalties for Making Tax Digital for Income Tax (GOV.UK)
- HMRC interest rates for late and early payments (GOV.UK)
- Interest rates and Bank Rate: our latest decision (Bank of England)
- SALF305: interest charged on late payments of tax (HMRC internal manual)
- SALF308A: late payment penalties on unpaid Income Tax (HMRC internal manual)
- Claim to reduce payments on account (GOV.UK)
- Pay your Self Assessment tax bill (GOV.UK)
- If you cannot pay your tax bill on time (GOV.UK)
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.
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