HMRC is strict on its penalties for late payment of corporation tax, not paying your VAT bill or PAYE and currently charges interest by calculating the number of days by which a payment is late before applying the relevant interest rate.

If you haven’t paid your PAYE on time, you should expect a warning letter from HMRC.

These interest payments are charged on accounts that are either not paid in full, or were not settled on time.


Monthly Deadlines for PAYE

The due date when paying PAYE by cheque the 19th of each month, while for those making electronic transfers it is the 22nd.  For those paying electronically, interest will accrue from the period between the 19th and the 22nd, but then be cancelled once the electronic transfer has cleared.

Interest Amounts on Late Payments 2016

Number of defaults in a tax yearPenalty percentage applied to the amount that is late in the relevant tax month (ignoring the first late payment in the tax year)
1 to 31%
4 to 62%
7 to 93%
10 or more4%

Daily interest will continue to accrue on all unpaid amounts from the due and payable date to the date of payment.