The UK Chancellor delivered her first Spring Statement in March 2025. Compared to the Autumn Budget of 2024, it introduced fewer major tax changes directly impacting businesses. However, with increased penalty rates related to self-assessment, VAT returns and more, taxpayers need to understand the updated rates and the rationale behind these changes.
Penalties for Late Self-Assessment Payments
If you run a business in the UK, one of the most crucial changes in the 2025 Spring Budget is the significant rise in penalties for late tax payments. From April 2025, HMRC has introduced higher interest rates on overdue tax bills, particularly for Self-Assessment. Please be aware that any delay in payment may significantly increase the interest owed for the overdue period.
Late payment penalties increased from April 2025:
Up to 15 days late: 2% → 3%
16–30 days late: 2% → 3%
31+ days late: 4% → 10%
*These new rates apply not only to overdue Self-Assessment payments but also to late VAT payments.
Interest Rates on Late Tax Payments
In addition to Self-Assessment and VAT, other penalty interests of overdue tax payments have also increased by 1.5%.
The standard late payment interest rate has increased: Bank Rate(BR) (4.5%) + 2.5% → BR + 4%
For Corporation Tax: BR + 1% → BR + 2.5%
For Customs Duties: BR + 2% → BR + 3.5%
Strong Penalties for Tax Evaders
According to the 2025 Spring Statement, HMRC will impose tougher penalties on tax evaders and expand its dedicated task force to tackle tax avoidance, particularly high-net-worth individuals. By the end of December 2024, outstanding tax debt unrecovered by HMRC had reached £44 billion — more than double the amount from five years ago. This sharp increase has prompted the government to implement new countermeasures.
As the penalty rates increased, business directors should be strongly advised to stay on top of their accounting and tax obligations. If you’re currently dealing with complex tax issues or have missed a filing deadline, don’t hesitate to get in touch with BH1 Accounting.
