What Is Statutory Interest and When Can It Be Charged?

This guidance is for taxpayers reviewing HMRC charges who want to understand whether statutory interest applies to their situation and why it has been charged.

Statutory interest is not a penalty. It is applied by HMRC where tax is paid late or adjustments result in tax becoming due. Understanding when statutory interest applies — and when it does not — helps avoid incorrect assumptions about HMRC charges, particularly when discussing the position with a tax advisor in London.

Why Statutory Interest Appears on HMRC Statements

Statutory interest is charged to compensate HMRC for the time tax remains unpaid. It applies automatically where relevant conditions are met and continues to accrue until the underlying tax is settled.

Because statutory interest is applied by law rather than discretion, it usually cannot be appealed in the same way as penalties. This often causes confusion for taxpayers reviewing HMRC statements, particularly those seeking guidance from a tax consultant in London.

Check Whether Statutory Interest Applies

In Practice – Where Statutory Interest Is Commonly Misunderstood

In practice, we often see statutory interest mistaken for a penalty or assumed to be negotiable. Confusion also arises where taxpayers believe interest has been applied incorrectly, when in fact it reflects the period tax remained unpaid under HMRC rules.

For tailored support, speak to experienced accountants in London who regularly help individuals and businesses review HMRC calculations and interest charges. Our local team can help you confirm whether statutory interest has been applied correctly.

Find out more about our accounting support in London

HMRC explains how statutory interest works, including when it applies and how it is calculated, in its official guidance on
GOV.UK.

Check Whether Statutory Interest Applies to You

Statutory interest is applied automatically in certain situations, but it does not apply in every case. A short review can help confirm whether the interest shown on your HMRC account is correct and whether anything needs clarifying.

 

Need Help With HMRC Statutory Interest on Late Tax Payments?

HMRC charges statutory interest on late tax payments across Self Assessment, VAT, PAYE and corporation tax, and this interest can increase your total liability if payments aren’t made on time. Specialist guidance can help you understand how interest is calculated and explore options like payment plans to manage liabilities effectively.

Speak to a Specialist About HMRC Statutory Interest

Trusted guidance from London-based accountants, focused on accuracy, clarity, and compliance. 


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CIGMA Accounting
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