HMRC received £345m in late payment interest charges

HMRC received £345m in late payment interest charges

The amount of late payment interest paid to HMRC has soared in recent years to £345.8m, nearly three times higher than the £127m recorded in the year to October 2021.

A freedom of information (FOI) request has revealed the true amount of late payment interest paid to HMRC by individuals and trustees in respect of their unsettled tax liabilities which has more than doubled in the last year alone.

HMRC was also paid £638m in late payment interest over the three-year period from November 2020 to October 2023.

Analysis of the underlying figures within this, have demonstrated a significant increasing trend, driven in part by the increase in tax and national insurance payments paid by individuals in recent years.

In the 12-month period to October 2021, late payment interest paid to HMRC totalled just over £127m. This increased to £159m in the year to October 2022 and then rose again to £345.8m in the year to October 2023.

HMRC charges late payment interest at an annual rate equal to the Bank of England base rate plus 2.5%, which with the successive increases in base rate, the late interest payment rate now stands at 7.75%.

Late payment interest is charged on unpaid income tax, capital gains tax and some National Insurance contributions that are not paid by the deadlines.

The main deadline for individuals and trustees is 31 January each year for balancing payments in respect of the previous tax year. Additionally, interest is also charged on overdue payments on account, which are advance tax payments due by some taxpayers, payable twice a year in January and July.

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