HMRC has charged £513m in interest on the late payment of income tax since 2020, a new Freedom of Information (FOI) request submitted by NFU Mutual has shown.

This follows the Government further hiking the interest rate on overdue tax payments in April to its highest rate for 18 years.

According to NFU Mutual’s FOI, HMRC saw receipts for interest on overdue payments jump from £147m in 2021/22 to £252m in 2022/23.

In the five tax years between April 2018 and April 2023, the amount received by HMRC in late payment interest reached £834m. This includes the £513m collected in interest in the three tax years between April 2020 and April 2023.

From April 2025, the Government increased the late payment interest rates further to 4% plus base rate which saw the rate jump to 8.5%, its highest level since August 2007. The rate fell to 8.25% at the end of May to consider the latest Bank of England interest rate cut.

The interest on late payments was previously set at 2.5% over base rate which means that late payers faced a 7% interest charge.

Chartered financial planner at NFU Mutual, Sean McCann, said: “The change in April saw the interest on late tax payments rise to 8.5% to its highest level since August 2007 – even with the recent reduction in the base rate, an interest rate of 8.25% is a heavy charge on taxpayers who pay late.

“Late payment interest accrues daily from the date the payment is due, so this increase makes it even more crucial to pay your tax on time.”

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