Definition: A late payment penalty is a charge HMRC adds when VAT is not paid in full by its due date. Since 1 January 2023 the old default surcharge has been replaced: penalties now grow the later you pay — nothing for the first 15 days, a percentage charge from day 16, and a bigger percentage plus a daily charge from day 31. Interest runs on top, from the very first day.
Two figures are all you need — what you owe, and how late the payment is.
For everyday adding or removing VAT, use our main VAT Calculator — the free tool on our homepage. It works out the net, the VAT and the gross in one step.
This penalty estimator is a specialist helper for one job: late payments. For everything else, the main calculator is the one to bookmark.
Open the Main VAT Calculator →Your VAT return and payment are due 1 calendar month and 7 days after the end of your VAT accounting period. Enter the last day of your period and we will work out your deadline:
One date in, one deadline out.
The later you pay, the more it costs. HMRC's system (for VAT periods starting on or after 1 January 2023) works in three bands:
| How late you pay | First penalty | Second penalty |
|---|---|---|
| On time, up to 15 days late | None | None |
| 16 to 30 days late | 3% of the VAT outstanding at day 15 | None |
| 31 days or more late | 3% of the VAT outstanding at day 15, plus 3% of what is still outstanding at day 30 | 10% a year on the outstanding balance, charged daily from day 31 until you pay in full |
On top of any penalty, late payment interest is charged from the first day your payment is overdue until you pay in full. The interest rate is the Bank of England base rate + 2.5% — currently 6.25% (base rate 3.75%, October 2026).
Step by step, the cheapest way out of a late payment is simple:
Paying late is only half the picture. Submitting your return late earns you penalty points — one point for each late return, including nil and repayment returns:
| How often you file | Points threshold | What happens at the threshold |
|---|---|---|
| Annually | 2 points | A £200 penalty |
| Quarterly | 4 points | A £200 penalty |
| Monthly | 5 points | A £200 penalty |
Once you are at the threshold, every further late return costs another £200. Points and penalties can be appealed if you have a reasonable excuse. Our full guide to VAT return deadlines in the UK covers the points system, the deadlines table and how points expire, and our VAT return guide explains what goes in each of the 9 boxes.
Do not bury your head in the sand — HMRC's system rewards early contact. A Time to Pay arrangement spreads the bill into instalments you can manage, and agreeing one early can reduce or even remove the late payment penalties. Interest still runs while you pay the plan off. Check the current VAT rate page if you also need to double-check the figures on your return itself.
This calculator is general information and an estimating tool, not tax advice. HMRC's own assessment is the final figure — if a penalty looks wrong, use the review and appeal route in HMRC's letter, or speak to an accountant.
How much is the penalty for paying VAT 15 days late?
Nothing. If you pay in full within 15 days of the due date there is no late payment penalty. Late payment interest is still charged from the first day your payment is overdue until you pay in full.
What happens if my VAT payment is 31 or more days late?
The first late payment penalty becomes 3% of the VAT outstanding at day 15 plus 3% of what is still outstanding at day 30. On top of that, a second penalty builds up daily at 10% a year on the outstanding balance, from day 31 until you pay in full — and late payment interest keeps running as well.
How does HMRC work out late payment interest?
Late payment interest is charged from the day after the due date until you pay in full, at the Bank of England base rate plus 2.5%. With the base rate at 3.75%, the interest rate is currently 6.25% a year, worked out daily on the amount you owe.
Do penalties apply if I owe no VAT but submit my return late?
Late payment penalties only apply to VAT that is actually owed and paid late. Late submission penalty points are different: you get a point for every late return, including nil and repayment returns, and a £200 penalty when your points reach the threshold for your accounting period.
Can a payment plan reduce my VAT late payment penalty?
Yes. If HMRC agrees a Time to Pay arrangement with you, it can mean lower or no late payment penalties — asking on or before day 15 gives the best outcome, and asking by day 30 still helps. Ask as soon as you know you cannot pay on time, and keep to the plan once it is agreed.
Can I appeal a VAT penalty?
Yes. HMRC's penalty letter offers a review, and you can appeal to the tax tribunal. A penalty can be cancelled or reduced if you have a reasonable excuse for paying or filing late. You can check and appeal penalties in your VAT online account.
For everyday adding or removing VAT, use our free main VAT Calculator on the homepage.
Related guides: VAT Return Deadlines in the UK · VAT Return: The 9 Boxes Explained · Current VAT Rate in the UK