Increased Penalties for Late Payments

A light VAT update in the Spring Statement from Chancellor Rachael Reeves.

Increased Late Payment Penalties

Starting April 2025, the government will raise late payment penalties for VAT taxpayers.

The new penalties will be:

• 3% of the overdue tax for delays of 15 days – up from 2%

• An additional 3% for delays of 30 days – up from 2%

• 10% per annum for where tax is overdue by 31 days or more – up from 4%

Investment in HMRC Staff

• £114 million over five years to recruit 600 additional debt management staff

• £100 million over five years to recruit 500 additional compliance staff

This initiative aims to improve tax compliance and encourage timely payments, which we understand will include VAT.