VAT penalties
VAT splits the lateness in two and charges each half separately: the return builds points, one per miss, £200 when the threshold falls; the payment runs on a clock, nothing for fifteen days, 3% at day 15 and again at day 30, then a meter at 10% a year. The rates rose in April 2025, and interest runs from day one regardless.
The payment clock
already charged at this lateness still ahead
Points thresholds in force for VAT periods starting 1 January 2023; payment percentages 3%, 3% and 10% a year effective 6 April 2025, previously 2%, 2% and 4%; verified against gov.uk, checked 18 July 2026.
The regime replaced the old default surcharge for VAT accounting periods starting on or after 1 January 2023. The payment percentages rose from 2%, 2% and 4% a year to 3%, 3% and 10% a year from 6 April 2025; older debts keep the earlier rates. Day one is the day after the due date, which for a quarterly return is one month and seven days after the period end. The calculator assumes the full amount stays unpaid; part payments shrink the balance the day-15 and day-30 charges are measured on.
Paying in full, or proposing a Time to Pay arrangement, within the first 15 days keeps the first penalty away entirely, and an agreed plan can reduce or remove the later ones; interest still runs from day one, at a rate tied to the Bank of England base rate. On the points side, nil and repayment returns count like any other, points below the threshold expire automatically at the end of the month falling 24 months after the return was due, 25 where that deadline was itself a month-end, and at the threshold only the full reset clears them.
This is the blueprint regime: the same points-and-percentages design reaches Self Assessment with Making Tax Digital from April 2026, and for everyone else it has been announced for April 2027. Whether HMRC agrees time to pay, and whether an excuse is reasonable, is judgment, and none of it is arithmetic. How we check these numbers.