Taxes Management Act 1970 section 86

Interest on overdue income tax and capital gains tax

Section 86 sets out the rules for charging interest on late payments of income tax and capital gains tax, including payments on account, balancing payments, and the consequences of claiming to reduce payments on account.

• Overdue income tax (including payments on account) and capital gains tax carry interest from the relevant due date until the date of actual payment
• Where a taxpayer has claimed to reduce their payments on account and a balancing payment then arises, interest is recalculated as if the payments on account had been higher — but capped at the level that would have applied had no reduction claim been made
• Where a taxpayer's final liability turns out to be less than the payments on account, so that a repayment is due, interest on the payments on account is partially remitted to reflect the overpayment
• Interest applies even if the relevant due date falls on a weekend or bank holiday