HMRC has pocketed £409 million in late payment interest from struggling taxpayers – triple the amount it raked in just two years ago.
The eye-watering figures, revealed through a Freedom of Information request, expose how the taxman is benefiting from missed payment deadlines.
Back in 2021, HMRC made £131.9m from interest charges – but now, thanks to soaring rates, the number has soared.
The news comes as grieving families are being hit with crippling inheritance tax bills – even as HMRC fails to answer phone calls from desperate taxpayers.
In fact, the tax authority handled just half the number of calls last year compared to a decade ago.
And it’s only going to get worse. From April, interest on late payments will rise to a shocking 8.5% – the highest since 2007 – meaning even more hardworking Brits will be caught in the taxman’s grip.
Chris Etherington, of accountancy firm RSM, warned: « Late payment interest has become an increasingly important source of revenue for HMRC. While a penalty is understandable, it risks pushing financially struggling taxpayers into a debt spiral.”
Families struggling to pay
Experts say the cost-of-living crisis has left many unable to pay their tax bills, as frozen tax thresholds and shrinking tax-free allowances drag more and more people into HMRC’s ever-tightening net.
Laura Suter of AJ Bell told the Telegraph: “We’ve seen a rise in taxpayers missing payments because they simply can’t afford it. More people will be forced into self-assessment, and these punishing penalties will hit them hard.”
But despite the fury, HMRC has defended its charges, claiming:“The interest we charge is fair.”
A HMRC spokesman told the Telegraph: “The interest we charge and pay is fair. It ensures those paying late don’t get an unfair financial advantage over those paying on time.
“It also ensures people aren’t encouraged to overpay their tax to secure a higher interest rate than available commercially.”
We reported last month that taxpayers who pay their taxes via self-assessment will pay more interest as HMRC cracks down on late payments. The interest charged on unpaid tax will climb by 1.5 percentage points.
Andrew Park, Tax Investigations Partner at Price Bailey, said at the time: « This is a worrying shift from charging enough to deny taxpayers an advantage in paying late to creating another punishment by the backdoor.
« It’s a blatant cash grab by the taxman and one which comes without any safeguards. »
