Kevin McLeod
Written By Kevin McLeod
Licensed Insolvency Practitioner
July 22nd, 2023

As a taxpayer, it is your responsibility to make your PAYE and VAT payments on time. HMRC does not send reminder letters before PAYE or VAT payments become due, so you must be aware of the deadlines. Failure to make the VAT payment on time could result in late payment penalties and daily interest charges being applied.

It used to be the case that late payment interest charges were applied at the end of the tax year. However, over the last few years, all that has changed. Now, HMRC charges daily interest on late payments of PAYE and VAT by taking the number of days by which a payment is late and applying the relevant late payment interest rate. This is currently 2.75 percent. The interest will apply from the due date to the date the payment is made. The charge will then be raised when the payment is made in full

When Should PAYE and VAT be paid?

  • PAYE – Payments are due by the 22nd of the month following the end of the tax month the payments relate to. For example, PAYE/NICs for the month of December must be in HMRC’s account by 22 January. Failure to ensure cleared funds to reach HMRC by the due date will result in a daily interest charge of 2.75 percent being applied.
  • VAT – If you are registered to pay VAT, your VAT return should be submitted and any bill paid one month and seven days following the period it applies to. For example, if VAT is payable for the quarter to 31 March, your VAT return must be submitted and cleared funds to be in HMRC’s account by 7 May. Failure to do so and daily interest of 2.75 percent will be applied.    

Need Advice?

Are you struggling to pay your VAT bill on time? Perhaps you’d like to discuss a payment plan with HMRC? For confidential, no-obligation advice, please contact 020 8444 3400.  

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