Late payment penalties

The measure

The government will increase late payment penalties for VAT and Income Tax Self Assessment (ITSA) taxpayers (as they join MTD from April 2025 onwards), to encourage taxpayers to pay on time. 

The new rates will be 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more. 

Who will be affected?

VAT and ITSA taxpayers who make late payments of their tax liabilities. 

When will the measure come into effect?

This measure will be effective from 6 April 2025.