Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Interest definition

What does Interest mean? Interest is the additional sum payable for the time‑value of money: the amount a borrower pays a lender for using money, the return on debt‑type investments, and the sum awarded for being kept out of funds in litigation. Entitlement arises by: - Contract (contractual interest), including default interest, fixed or floating rates (for example, over base rate or SONIA), and simple or compound interest. Clauses must be clearly drafted and not operate as an unlawful penalty or unfair term. - Statute (statutory interest), for example late payment interest on commercial debts under the Late Payment of Commercial Debts (Interest) Act...

UK tax interest: late payment and repayment—harmonised regime, devolved taxes, corporation tax quarterly instalment payments, VAT, PAYE/NICs, penalties, mitigation, and 2025 rate changes

Published by a LexisNexis Tax expert

Practice notes

Taxpayers who settle tax after the deadline are liable to interest, charged at a rate laid down in law. The Finance Act 2009 (FA 2009) established a unified framework for interest on late-paid tax intended to apply across all taxes, excluding excise duties; corporation tax and petroleum revenue tax were at first outside the framework, but are now slated for inclusion from a date yet to be confirmed. This Practice Note outlines both the unified rules and also covers how interest may arise where late payment falls outside that framework.

Harmonised late paid interest regime

The FA 2009 framework is being phased in progressively across the different taxes...

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Web page updated on 22/05/2026

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