If you haven’t yet submitted your Self Assessment tax return, now might be a good time to get it off your to-do list. With HMRC increasing the interest charged on late tax payments to 8% from 24 November 2026, leaving things until the last minute could prove an expensive decision.
The increase, from the current rate of 7.75%, follows the Bank of England’s decision to raise the base rate from 3.75% to 4% on 5 November 2026. HMRC’s late payment interest rates are linked to the Bank of England base rate, with late payment interest set at four percentage points above it.
What does the increase mean for taxpayers?
From 24 November 2026, anyone who pays their tax late will face an interest rate of 8% on the outstanding amount.
This is particularly relevant for anyone completing a Self Assessment tax return, with the deadline for paying any tax owed falling on 31 January 2027.
If you don’t pay your tax bill in full by the deadline, HMRC will begin charging interest at the new rate on the outstanding balance. The longer you leave it unpaid, the more interest you will accumulate.
The changes also affect other major taxes collected by HMRC, including:
- Income Tax
- National Insurance contributions
- Capital Gains Tax
- VAT
- Corporation Tax
For larger companies paying Corporation Tax in quarterly instalments, the interest rate on underpaid instalments will also increase, from 6.25% to 6.5% from 16 November 2026.
Why filing early makes sense
Filing your tax return early won’t change your payment deadline, but it does give you several advantages.
You’ll know exactly what you owe. Submitting your return now means you can establish your tax liability well ahead of the January deadline, rather than discovering an unexpected bill just before payment is due.
You’ll have more time to plan. Knowing how much tax you need to pay gives you the opportunity to organise your finances, put money aside and make arrangements if necessary.
You’ll avoid the last-minute rush. Gathering paperwork, checking figures and resolving queries can take longer than expected. Filing early gives you time to deal with any complications without the pressure of an approaching deadline.
You’ll reduce the risk of penalties. The deadline for submitting your online Self Assessment return is 31 January 2027. Missing it can result in an automatic £100 late filing penalty, even if you have no tax to pay.
Don’t leave it until January
The increase in HMRC’s late payment interest rate is another reminder that leaving tax administration until the last minute can have financial consequences.
There is no need to wait until January to submit your return. Once you have the information you need, you can file it, find out what you owe and make sure you are prepared for the payment deadline.
If you would like support with understanding your tax position or planning for your upcoming tax payments, please get in touch. We’re here to help.
