COM80010 - Interest: how interest is calculated: late payment interest
Source: gov.uk (2025-12-05)


Late payment interest arises when a company pays its tax after the normal due date. It is calculated from:
- the normal due date (see Glossary for more information) for the Accounting Period (AP)
- to the effective date of payment (EDP)
The normal due date is a non-interest bearing date, therefore late payment interest is calculated from the day after.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Interest is handled on SAFE for:
- all APs ending before 1 October 1993
- S455 (formerly S419) and S747 charges for APs ending on or before 30 June 1999
- common non-COTAX assessment types. See COM23133 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com23133) for a list of these assessment types
Also, where the number of interest accruals exceeds 200 on an AP, COTAX is unable to calculate and record the late payment interest charge. These charges have to be raised manually and the charge recorded on the SAFE system.

Viewing late payment interest

Function VPPD (View Payment and Posting Details) displays the total amount of interest charged automatically and clerically for an Accounting Period (AP). Late payment interest is identified by the posting code IDE on the postings screen. If late payment interest has been raised or amended clerically the notes column on the postings screen identifies the operator who raised or amended the charge.

You can view the calculation details in either functions VPPD or DINT (Display Interest Computation).

In function VPPD you need to select a late payment interest posting from the postings screen and select the [OK] button. The following screen displays details of the interest calculation that has been calculated, either clerically or automatically by COTAX.

Function DINT displays the interest calculation for a particular AP. You can view how COTAX has calculated the late payment interest charge either clerically or automatically. You can also use this function to calculate interest on any unpaid tax to a later date, for example in time to pay cases. However, you cannot use the function to update the record with the calculation; only function RMIC (Raise Manual Interest Charge) allows you to do this. See COM80080 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com80080) for more information.

Where interest is handled by COTAX, the reconciliation statement for all assessment output and penalty determinations shows the late payment interest, including accruing interest, and debit interest charged as one figure under ‘interest due including any debit interest’. Credit interest is not shown separately but is included in the payments made figure.

See:
- COM80011 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com80011) for a list of forms relevant to this subject
- COM80012 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com80012) for a list of functions to use in particular situations
- COM80013 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com80013) for legislation applying to this subject.