Can't Pay Your VAT Bill on Time? HMRC Penalties, Interest and the 15-Day Rule Explained

Struggling to pay VAT happens to good businesses. Here is what HMRC charges, when, and what you can do about it.

By In Front Accounting · 3 November 2026

If your VAT bill is due and the money isn't there, don't panic and don't ignore it. The rules are clearer than they look, and acting early usually costs less.

Worried about a VAT bill? Talk it through with us.

Get started

The short version

File your VAT Return on time, even if you can't pay.
Pay what you can, as soon as you can.
Interest starts on day 1 after the due date.
A late payment penalty starts after day 15.
Contact HMRC early about a payment plan (Time to Pay).

Questions you might be asking

Is there a penalty if I pay a few days late?
How much will HMRC charge?
Will I get penalty points?
Can I pay in instalments?

The 15-day rule

For VAT periods starting on or after 1 January 2023, HMRC uses late payment penalties instead of the old default surcharge. If you pay in full by the end of day 15 after the due date, there is no late payment penalty.

Day 15 is not interest-free. HMRC charges late payment interest from the first day your VAT is overdue until it is paid, even if no penalty applies.

How the penalties work

These rates apply to VAT periods starting on or after 1 April 2025. Earlier periods used lower rates (2%, 2% and 4% a year).

VAT late payment penalties by days overdue
Days overdue	Penalty
Days 1–15	No penalty. Interest applies.
Days 16–30	First penalty: 3% of the VAT outstanding at the end of day 15.
Day 31 onwards	A further 3% of the VAT still outstanding at the end of day 30, plus a second penalty charged daily at 10% a year on the outstanding balance until paid.

VAT late payment penalty calculator

A quick estimate for VAT periods starting on or after 1 April 2025.

VAT amount outstanding (£)

Days late

Estimated late payment penalty

£300.00

First penalty: £300.00
Second penalty: £0.00

This is an illustrative estimate, not an official HMRC calculation. It assumes the full amount stays unpaid throughout and excludes late payment interest, part payments, Time to Pay arrangements and the rules for earlier VAT periods. HMRC's figures are final.

Worked example: £10,000 VAT

Assuming the full £10,000 stays unpaid until the day shown (interest is separate):

Paid 10 days late: £0 penalty
Paid 20 days late: £300 (3% of £10,000)
Paid 30 days late: £300
Paid 31 days late: £600, plus the daily second penalty (about £2.74 a day)

Late payment interest

Interest is the Bank of England base rate plus 4 percentage points. It runs from the original due date until you pay, and it changes when the base rate changes. HMRC lists the current rate on GOV.UK.

Penalty points are for late returns, not late payment

Submitting your return late earns a penalty point. When you reach the threshold, HMRC charges a £200 penalty, and another £200 for each later late return while you're at the threshold.

Annual returns: 2 points
Quarterly returns: 4 points
Monthly returns: 5 points

Below the threshold, each point usually expires after 24 months. Once you reach the threshold, points are only reset after a period of compliance (12 months for quarterly, 6 for monthly, 24 for annual) and all returns due in the previous 24 months have been submitted. See HMRC's penalty points guidance.

Nil and repayment returns still count, so file them on time too.

What to do if you can't pay

Submit your return on time so you avoid penalty points.
Pay part of it now if you can. Penalties and interest are based on what's still outstanding.
Ask for Time to Pay early. Asking between days 1 and 15 can avoid the first penalty; asking by day 30 can avoid the higher charges from day 31. Interest still applies. See paying HMRC in instalments.
Keep to the plan. If an arrangement is cancelled, HMRC can charge penalties as if it never existed.

More VAT help: our VAT returns service and guide to what a valid VAT purchase invoice must contain.

FAQs

Can I pay VAT 7 days late?

If you pay in full by the end of day 15 after the due date, there is no late payment penalty. HMRC still charges late payment interest from the first day the payment is overdue until it is paid.

Can I pay VAT 14 days late?

Yes, in the sense that no late payment penalty applies if the full amount is paid by the end of day 15. Interest is still charged for every day it is late.

Can I pay VAT 30 days late?

For VAT periods starting on or after 1 April 2025, a first late payment penalty of 3% of the VAT outstanding at day 15 applies. If it is still unpaid after day 30, a further 3% and a daily second penalty apply. Interest is also charged.

Is there a 14-day grace period for VAT?

No. There is a 15-day window before a late payment penalty applies, but it is not a grace period. Your VAT is still late from day 1 and interest runs from the original due date.

Will HMRC give me penalty points for paying late?

No. Penalty points are for submitting VAT Returns late. Paying late leads to late payment penalties and interest instead. That is why you should file on time even if you cannot pay.

Can I pay my VAT bill monthly?

You may be able to set up a Time to Pay arrangement with HMRC to pay in instalments. Asking early can mean lower or no late payment penalties, but interest is still charged.

What if I have zero VAT to pay?

You must still submit your VAT Return on time, including nil and repayment returns. A late nil return can still get a penalty point.

Can I appeal a VAT penalty?

Yes. HMRC sends a penalty decision letter offering a review. You can ask for a review or appeal to the tax tribunal, and a penalty may be cancelled if you had a reasonable excuse.

Official sources

General guidance only, checked against GOV.UK in November 2026. It is not advice for your specific situation.

Need help with VAT or a payment plan? We can help.

Get started