What happens if I calculate tax but pay late?
So you filed your return on time (well done!), but you don't have the cash to pay the bill. Don't panic. HMRC distinguishes between 'Late Filing' and 'Late Payment'. The penalties here are purely financial, but they ramp up at specific deadlines.
1 The Typical Timeline
If you take no action, this is the standard statutory process. Timescales are approximate but typical for 2026.
Interest Starts
Interest is charged immediately from the deadline (31st Jan). The rate is usually the Bank of England base rate + 2.5%.
5% Surcharge
If you haven't paid (or agreed a plan) by 2nd March, a 5% penalty is added to the total tax bill.
2nd Surcharge
Another 5% of the outstanding tax is added to your debt.
3rd Surcharge
A final 5% is added. By now you have effectively paid a 15% penalty plus interest.
2 Free Calculators & Checks
Interest is calculated daily. See how much ignoring the bill is costing you right now.
Interest & Surcharge Calculator
HMRC charges daily interest (~7.75%) plus 5% surcharges at 30 days, 6 months, and 12 months.
Surcharge active!
Can you pay in installments? Check if you are eligible to set up a plan online.
"Time to Pay" Checker
Can you set up a monthly payment plan online without speaking to a human? Check eligibility.
Eligible for Online Setup
Great news. You meet the criteria to set up a Direct Debit plan online via your Government Gateway account. Use the link below.
Go to Gov.uk SetupThe 'Time to Pay' Arrangement
If you call HMRC *before* the payment deadline, you can often set up a monthly payment plan (Time to Pay) without needing to be 'wealthy'. They are surprisingly helpful if you phone them early.
What if I just ignore it?
HMRC has more power than banks. They can take money directly from your wages (up to £3,000/year via tax code adjustment) or send bailiffs without going to court first.
Summary of Options
Set up 'Time to Pay'
This is the secret weapon. If you call before penalties hit, you can spread the specific tax bill over 12 months. You need to earn less than £50k/year to do this online.
Pay What You Can
Interest is charged on the *unpaid* difference. Paying even 50% of the bill dramatically reduces the interest and surcharges.
Ignore It
HMRC is faster than banks. They can use 'Direct Recovery of Debts' to take money straight from your bank account if you owe over £1,000.
Common Questions
Can I pay in installments?
Yes, but you MUST agree this with HMRC first. If you just start paying monthly without telling them, their computer will still charge you penalties.
Do they check my credit score?
No. HMRC debt is not recorded on your credit file (unless they get a CCJ, which is rare). However, they share data with debt collection agencies.
Can they take my house?
Extremely unlikely for standard income tax debt. They usually prefer taking money from wages or bank accounts directly.
Official Sources & References
Related Situations
Other guides accurately explaining what happens next in tax & hmrc .
What happens if HMRC freezes my bank account?
HMRC has two ways to stop your cash: Civil debt collection (DRD) or Criminal investigation (AFO). Know which one you are facing and how to protect your living costs.
What happens if I don't respond to a letter from HMRC?
Ignoring HMRC is dangerous. They can 'determine' (guess) your tax bill and charge daily penalties for silence.
What happens if I'm reported to HMRC?
Being reported for tax evasion is stressful. HMRC's 'Connect' system will analyse your data. If you have undeclared income, telling them BEFORE they investigate reduces penalties significantly.