VAT late payment penalty calculator and ready reckoner
Use this VAT late payment penalty calculator to work out what HMRC charges when a VAT bill isn’t paid on time, including late payment interest, at HMRC’s current rates. Use the calculator below, find your figure in the ready reckoners, or follow the four steps.
Overdue VAT bill? A VAT loan pays HMRC in full, and your company repays over three months.
The penalties apply to VAT periods starting on or after 1 January 2023. HMRC also charges interest from the first day the VAT is overdue. The figures here are estimates; HMRC’s own calculation is final.
VAT penalty and interest calculator
Enter the VAT unpaid, the payment deadline and the date the VAT was, or will be, paid. The calculator uses HMRC’s current rates and assumes none of the VAT is paid before that date.
VAT late payment calculator
Penalties and interest on a late VAT payment
- Penalties
- Interest
- Total
Assumes none of the VAT is paid before that date and one interest rate for the whole period, and leaves out interest on unpaid penalties. HMRC's own calculation is final.
How much is the penalty for paying VAT late?
HMRC charges two penalties, and both depend on how many days the VAT is overdue:
- Days 1 to 15: no penalty.
- Days 16 to 30: a first penalty of 3% of the VAT still unpaid at day 15.
- Day 31 onwards: a further 3% of the VAT still unpaid at day 30, plus a second penalty charged every day at 10% a year on the VAT that is still unpaid.
These rates have applied since 1 April 2025. Before then they were 2%, 2% and 4% a year. HMRC sets out the rules in how late payment penalties work if you pay VAT late.
The penalties don’t apply to VAT payments on account, or to instalments under the VAT Annual Accounting Scheme.
The first 15 days matter most. A VAT loan decision normally comes within 24 hours, and HMRC is paid directly, so a UK limited company that arranges a loan in that window can pay HMRC before any penalty applies. Call 01494 956 871 to talk it through.
Did you know? You can fund your VAT bill
A VAT loan pays HMRC in full and on time, and your company repays over three months. Decisions within 24 hours, for VAT bills from £5,000 to £15 million.
The new VAT penalty regime explained
For VAT periods starting on or after 1 January 2023, HMRC replaced the old default surcharge with three separate charges:
- Penalty points for each late VAT Return, and a £200 penalty once you reach the points threshold.
- Late payment penalties when VAT is paid more than 15 days late.
- Late payment interest from the first day any VAT is overdue.
Unlike the default surcharge, a late return and a late payment are penalised separately, and every return counts, including nil and repayment returns.
The charges went up in April 2025. From 1 April 2025, late payment penalties rose from 2% to 3% at day 15, from 2% to 3% at day 30, and from 4% to 10% a year from day 31. From 6 April 2025, late payment interest rose from the Bank of England base rate plus 2.5% to base rate plus 4%.
VAT late payment penalty ready reckoner
Penalties only, if none of the VAT is paid until the day shown:
| VAT unpaid | 16–30 days late | 31 days late | 45 days late | 60 days late | 90 days late |
|---|---|---|---|---|---|
| £5,000 | £150.00 | £301.37 | £320.55 | £341.10 | £382.19 |
| £10,000 | £300.00 | £602.74 | £641.10 | £682.19 | £764.38 |
| £25,000 | £750.00 | £1,506.85 | £1,602.74 | £1,705.48 | £1,910.96 |
| £50,000 | £1,500.00 | £3,013.70 | £3,205.48 | £3,410.96 | £3,821.92 |
| £100,000 | £3,000.00 | £6,027.40 | £6,410.96 | £6,821.92 | £7,643.84 |
For other amounts, use the cost per £1,000 unpaid and multiply up:
| Per £1,000 unpaid | 16–30 days | 31 days | 60 days | 90 days | 120 days | 180 days | 365 days |
|---|---|---|---|---|---|---|---|
| Penalties | £30.00 | £60.27 | £68.22 | £76.44 | £84.66 | £101.10 | £151.78 |
| Penalties plus interest at 7.75% | £33.40 (at day 16) | £66.86 | £80.96 | £95.55 | £110.14 | £139.32 | £229.28 |
From day 31, each extra day adds about 27p per £1,000 in penalties, plus the interest.
Total cost of paying late: penalties plus interest
Penalties plus late payment interest, assuming HMRC’s rate stays at 7.75% (its rate from 9 January 2026) for the whole period. Check the current rate in HMRC’s interest rates table.
| VAT unpaid | 20 days late | 31 days late | 45 days late | 60 days late | 90 days late |
|---|---|---|---|---|---|
| £5,000 | £171.23 | £334.28 | £368.32 | £404.79 | £477.74 |
| £10,000 | £342.47 | £668.56 | £736.64 | £809.59 | £955.48 |
| £25,000 | £856.16 | £1,671.40 | £1,841.61 | £2,023.97 | £2,388.70 |
| £50,000 | £1,712.33 | £3,342.81 | £3,683.22 | £4,047.95 | £4,777.40 |
| £100,000 | £3,424.66 | £6,685.62 | £7,366.44 | £8,095.89 | £9,554.79 |
These totals, and the per-£1,000 figures above, leave out the interest HMRC also charges on penalties that aren’t paid on time, so treat them as a minimum.
When the penalties start: a date finder
For the four standard VAT quarters. The deadline is one calendar month and seven days after the quarter ends; day 1 is when late payment interest starts. Day 16 is when the first 3% penalty applies to whatever was unpaid at day 15. Day 31 adds a further 3%, and the daily 10%-a-year second penalty starts on whatever is still unpaid.
| Quarter ends | Payment deadline | Day 1 (interest) | Day 16 (first 3%) | Day 31 (second 3% and daily penalty) |
|---|---|---|---|---|
| 31 March | 7 May | 8 May | 23 May | 7 June |
| 30 June | 7 August | 8 August | 23 August | 7 September |
| 30 September | 7 November | 8 November | 23 November | 8 December |
| 31 December | 7 February | 8 February | 23 February | 10 March (9 March in a leap year) |
If your VAT quarters end in other months, count from your own deadline in the same way. See when a UK company has to pay a VAT bill.
Calculate your penalty in four steps
- Count the days late, starting from the day after the payment deadline.
- If the VAT is 16 or more days late, multiply the VAT still unpaid at day 15 by 3%.
- If it’s 31 or more days late, add 3% of the VAT still unpaid at day 30.
- For each day from day 31, add the VAT still unpaid that day × 10% ÷ 365.
The total of steps 2 to 4 is the penalty. To add interest, multiply the VAT unpaid by HMRC’s interest rate, divide by 365, and multiply by the days late.
To use it as a calculator in Excel or Google Sheets, put the days late in cell A2 and the VAT unpaid in cell B2, then enter this formula in any other cell. It assumes the whole amount stays unpaid, and it gives £986.30 for HMRC’s example below:
=IF(A2>=16, 0.03 * B2, 0) + IF(A2>=31, 0.03 * B2 + B2 * 0.1 * (A2-30) / 365, 0)
HMRC's worked example
HMRC gives this example. A business pays a VAT bill of £15,000 in full, 51 days late:
| Part | Calculation | Amount |
|---|---|---|
| First penalty, day 15 | 3% × £15,000 | £450.00 |
| First penalty, day 30 | 3% × £15,000 | £450.00 |
| Second penalty, days 31 to 51 | £15,000 × 10% × 21 ÷ 365 | £86.30 |
| Total penalties | £986.30 |
If part of the VAT is paid late
Each part of the penalty is worked out on the VAT still unpaid at that point. In this hypothetical example, a £20,000 bill is paid in two halves: £10,000 on day 20, and the rest on day 45.
| Part | Calculation | Amount |
|---|---|---|
| First penalty, day 15 | 3% × £20,000 | £600.00 |
| First penalty, day 30 | 3% × £10,000 | £300.00 |
| Second penalty, days 31 to 45 | £10,000 × 10% × 15 ÷ 365 | £41.10 |
| Total penalties | £941.10 |
HMRC late payment interest on VAT
HMRC charges late payment interest from the first day the VAT is overdue until it’s paid in full, at the Bank of England base rate plus 4% (HMRC’s guidance on late payment interest). The rate is 7.75% a year, and has been since 9 January 2026: the base rate of 3.75% plus 4%. It changes when the base rate changes. Two points are easy to miss:
- Penalties attract interest too. HMRC says interest will also be charged on all penalties if they are overdue, including late payment penalties.
- Interest continues during Time to Pay. Where VAT is paid in instalments, HMRC charges interest on the outstanding balance until it’s paid in full.
HMRC late payment interest rates
Recent rates for VAT periods starting on or after 1 January 2023, from HMRC’s interest rates table:
| From | Late payment interest |
|---|---|
| 9 January 2026 | 7.75% |
| 27 August 2025 | 8.00% |
| 28 May 2025 | 8.25% |
| 6 April 2025 | 8.50% |
| 25 February 2025 | 7.00% |
If the rate changes while VAT is overdue, each day is charged at the rate in force that day.
How late payment interest is calculated
HMRC charges simple interest on the VAT unpaid, day by day, from the day after the deadline until the VAT is paid: VAT unpaid × interest rate × days late ÷ 365. There’s no interest on interest. In HMRC’s own example, £8,340 paid 7 days late, when the rate was 8.5%, costs £8,340 × 8.5% × 7 ÷ 365 = £13.60.
Hypothetical example at today’s 7.75%: a company pays a £20,000 VAT bill 45 days late.
| Charge | Calculation | Amount |
|---|---|---|
| Late payment interest | £20,000 × 7.75% × 45 ÷ 365 | £191.10 |
| First penalty, day 15 | 3% × £20,000 | £600.00 |
| First penalty, day 30 | 3% × £20,000 | £600.00 |
| Second penalty, days 31 to 45 | £20,000 × 10% × 15 ÷ 365 | £82.19 |
| Total | £1,473.29 |
Interest is the smaller part at first. Most of the cost comes from the penalties, which start at day 16.
Can you appeal late payment interest?
No, but you can object to it if HMRC made a mistake or caused an unreasonable delay that added to the interest, if you dispute the date a payment was due or made, or if you’re questioning the legislation. HMRC only accepts an objection once the VAT it relates to has been paid in full.
How to stop the penalty growing
- Pay as soon as you can. The second penalty and the interest stop building up once the VAT is paid.
- Ask HMRC for Time to Pay early. HMRC says that if it agrees a Time to Pay arrangement, it can mean lower, or no, late payment penalties. Asking on or before day 15 can avoid the first penalty; asking by day 30 can avoid the second 3%; asking on or after day 31 stops the daily penalty growing. See our guide to an HMRC Time to Pay arrangement.
- Keep to the arrangement. If you don’t keep to a Time to Pay arrangement, HMRC can cancel it and charge both penalties as if it had never existed.
- Spread the bill with a VAT loan. HMRC is paid in full, and the company repays over three months. The VAT loan calculator gives an indicative repayment for bills from £5,000, for UK limited companies.
- If the deadline has already passed, read what to do if you can’t pay your VAT bill on time.
How to appeal a VAT late payment penalty
HMRC tells you about a late payment penalty in a penalty decision letter, which offers a review by HMRC. You can accept the review or appeal to the tax tribunal. You usually have 30 days from the date the penalty was issued to ask for a review or appeal. If you’re later than that, you’ll need to give a reason.
You can ask for a review in your VAT online account, or by writing to Solicitor’s Office and Legal Services, HMRC, BX9 1ZT.
A penalty may be cancelled or reduced if you have a reasonable excuse, such as a serious illness, the death of a close relative shortly before the deadline, or a failure of HMRC’s online services. HMRC says a payment that failed because there wasn’t enough money is not a reasonable excuse, and neither is not getting a reminder. If the problem is cash flow, ask for Time to Pay before day 15, or pay HMRC in full another way.
Are VAT penalties and interest tax deductible?
No. A company can’t deduct VAT penalties or HMRC’s late payment interest on VAT when it works out its taxable profits. Section 1303 of the Corporation Tax Act 2009 denies the deduction, and HMRC’s Business Income Manual says the same. So the whole cost of paying VAT late comes out of taxed profits.
Interest a company pays on business borrowing is treated differently: it’s normally deductible under the loan relationship rules. Your accountant can confirm how this applies to your company.
Penalty or VAT loan: what to compare
Take the total from the penalties-plus-interest table for the time it will take you to pay, and compare it with the total amount repayable on a VAT loan. Include anything else a late payment could affect, such as your time dealing with arrears. What is a VAT loan? explains how the finance works. VAT Loans is a credit broker, not a lender, and finance is subject to status, affordability and lender approval.
Frequently asked questions
Is there a penalty if I pay within 15 days?
No. If the VAT is paid in full within 15 days of the deadline, there’s no late payment penalty. Late payment interest still applies from the first day.
Are late payment penalties the same as penalty points?
No. Penalty points are for sending a VAT return late. Late payment penalties are for paying the VAT late, and they’re charged separately. Each late return adds a point. Once you reach the threshold (2 points for annual returns, 4 for quarterly and 5 for monthly), HMRC charges a £200 penalty, and a further £200 for each late return while you stay at the threshold (penalty points for late VAT returns).
Which VAT payments don't get late payment penalties?
VAT payments on account, and instalments under the VAT Annual Accounting Scheme. The penalties also only apply to VAT periods starting on or after 1 January 2023; earlier periods were covered by the old default surcharge.
Can a penalty be cancelled or reduced?
Yes, in some cases. HMRC says a penalty may be cancelled or amended if you have a reasonable excuse. You can ask HMRC for a review, or appeal to the tax tribunal. A Time to Pay arrangement can also mean lower, or no, penalties.
What is HMRC's late payment interest rate?
7.75% a year since 9 January 2026: the Bank of England base rate of 3.75% plus 4%. It changes when the base rate changes.
How is late payment interest on VAT calculated?
Day by day, as simple interest on the VAT unpaid: VAT unpaid × rate × days late ÷ 365, from the day after the deadline until the VAT is paid.
Are VAT penalties tax deductible?
No. VAT penalties and the late payment interest on VAT can’t be deducted from a company’s taxable profits.
How long do I have to appeal a VAT penalty?
Usually 30 days from the date the penalty was issued. If you miss it, you’ll need to give HMRC a reason for the delay.
Is there VAT on a VAT loan?
No. Loans and loan interest are exempt from VAT. See is there VAT on loans?
Rates and examples checked against GOV.UK on 27 September 2026. Written by the VAT Loans team. Last reviewed September 2026.