Detailed guidelines about HMRC’s late PAYE payment interest rates and timelines.
As of 22 August 2023, the late payment interest rate for PAYE is 7.75% (base rate plus 2.5%)[1]Trusted Source – GOV.UK – Late Payment Interest Rate for PAYE, while the repayment interest rate is 4.25% (base rate minus 1%, with a minimum floor of 0.5%).
HMRC applies interest to late PAYE payments based on the Bank of England base rate.
These interest payments are charged on accounts that are either not paid in full, or were not settled on time.
HMRC charges late PAYE interest daily[2]Trusted Source – GOV.UK – PAYE Interest on Late Payments, starting from the date a payment is due until it is paid in full. The specific date interest begins accruing depends on the type of charge and the payment method used.
For PAYE tax, Class 1 National Insurance contributions, student loan deductions, and CIS payments, interest is charged from:
Day 19 of the relevant month or quarter for all cheque payments
Day 22 of the relevant month or quarter for all electronic payments
For EYU (Earlier Year Update) or FPS (Full Payment Submission) underpayments at the end of the tax year, and penalties, interest is charged from:
19 April for all cheque payments
22 April for all electronic payments
Class 1A National Insurance contribution charges incur interest from:
19 July for all cheque payments
22 July for all electronic payments
Class 1B National Insurance contribution charges incur interest from:
19 October for all cheque payments
22 October for all electronic payments
For employers who pay electronically, interest may initially accrue from day 19 but will be adjusted to day 22 once the payment is received.
References
The primary sources for this article are listed below, including the relevant laws and Acts which provide their legal basis.
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