Paying the tax due on a voluntary disclosure

A voluntary disclosure is an offer to pay the unpaid tax, late payment interest and any penalty in one sum, using the payment reference number HMRC gave you when you notified. HMRC expects payment with the disclosure and no later than the 90 day deadline. If you cannot pay in full, you must call HMRC and agree an arrangement before you submit, not afterwards.

What makes up the amount you pay?

HMRC’s disclosure guide asks you to work out three things for each year included:

1. Tax. The extra income tax, capital gains tax, National Insurance or corporation tax on the income or gains not previously declared, after allowing for income already taxed through PAYE or already declared, and for payments on account.
2. Interest. Late payment interest on that tax from the date it was due until the date it is paid.
3. Penalty. A percentage of the extra tax, which you calculate yourself.

The total goes into the letter of offer at the end of the disclosure. The guide says the offer, together with HMRC’s acceptance letter, creates a legally binding contract. Paying less than you offered, or offering less than is due, both cause problems: underpayment leads to recovery action, and an offer HMRC thinks is too low may be rejected.

How is the interest calculated?

Interest is charged daily from the date the tax was due until the date it is paid. HMRC says any additional tax in a disclosure will be late and will attract interest, and that if the right interest is not included it will reject the disclosure as incomplete. Interest is not charged on the penalty unless the penalty itself is paid late.

The rate is linked to the Bank of England base rate. HMRC’s interest rates page says late payment interest has been base rate plus 4% from 6 April 2025, having been base rate plus 2.5% before that. As at October 2026 the page shows a late payment rate of 7.75% from 9 January 2026 for income tax, National Insurance and capital gains tax, and the same rate for corporation tax from the normal due date. Because the rate has changed many times, interest on an old year is a sum of daily amounts at each rate in force, not one rate applied to the whole period. See HMRC late payment interest.

Individuals with straightforward affairs and only basic personal allowances can use HMRC’s penalties and interest calculator; the guide says to include all years in one calculation rather than running each year separately. Companies are directed to the corporation tax rates and HMRC’s interest rate tables.

How is the penalty calculated?

On a disclosure it is you, not a compliance officer, who must work out the penalty in the way HMRC’s factsheets describe. Factsheet CC/FS7a sets the steps for an inaccuracy: identify the behaviour, decide whether the disclosure is prompted or unprompted, find the range, then reduce from the maximum for the quality of disclosure (up to 30% for telling, 40% for helping and 30% for giving access). The rate is the maximum less the reduction percentage of the gap between maximum and minimum.

Behaviour	Unprompted range	Prompted range
Careless	0% to 30%	15% to 30%
Deliberate	20% to 70%	35% to 70%
Deliberate and concealed	30% to 100%	50% to 100%

If you have taken a long time to come forward, for example 3 years or more, HMRC will usually restrict the reduction so the penalty is no lower than 10 percentage points above the minimum. Choosing the right behaviour is explained in choosing the behaviour category and the reductions in how HMRC reduces penalties for disclosure. The guide also warns that late payment penalties can apply on top where you failed to register or paid tax late because a return understated it.

How do you make the payment?

Use the payment reference number from your notification acknowledgement. HMRC accepts several methods but says electronic payment is best. Unless you have agreed extra time, the guide says to send payment at the same time as the disclosure, and it must reach HMRC no later than the 90 day deadline on your acknowledgement letter; see the 90 day deadline. Offshore disclosures through the Worldwide Disclosure Facility likewise require full payment on the date the disclosure is submitted.

Cryptoasset disclosures work differently: HMRC issues a 14 character payment reference beginning with X after you submit, and you must pay in full within 30 days. A personal credit card cannot be used, and a fee applies to corporate cards.

What if you cannot pay it all at once?

HMRC expects payment when you disclose. If you cannot pay in full, the guide says to tell HMRC as soon as possible, by calling the helpline, before you send the disclosure, and not to submit the disclosure or payment until you have spoken to it. Be ready to give:

• your disclosure reference number;
• how and when you intend to pay;
• your weekly or monthly income and outgoings;
• what you own, including your home, other property, vehicles, investments and money in the bank; and
• what you owe, including mortgages, loans and credit cards.

HMRC’s general guidance on payment plans says it checks whether a plan is affordable and, if a plan cannot be agreed, asks for the full amount. Interest continues to run on tax paid by instalments. For how these plans work generally, see HMRC Time to Pay arrangements.

What happens if you do not pay?

The guide says that if you do not pay your outstanding liabilities, HMRC will take steps to recover the money. The WDF guidance adds that if you do not pay in full or keep to agreed time to pay terms, HMRC may take recovery action. Missing payment also affects publication: HMRC only promises not to publish a deliberate defaulter’s details where the disclosure, including full payment, is complete and accurate before the deadline.

What does a full calculation look like?

Illustration only. A self employed photographer finds she under declared profits, giving £2,000 of extra income tax for one year due two years ago. She judges the error careless and discloses unprompted with full cooperation, so her penalty can fall to 0%. Interest at a simple illustrative 8% a year for two years adds about £320. Her offer is £2,320. Had the error been deliberate, the minimum unprompted penalty of 20% would add £400, making £2,720. HMRC’s calculator, applying the actual daily rates, would give the precise interest figure.

What are the common mistakes?

• Submitting the disclosure and then asking for time to pay; the request must come first.
• Applying today’s interest rate to every year instead of the rates in force over the period.
• Calculating interest from the date of the disclosure rather than the original due date.
• Ignoring payments on account, which have their own due dates; see payments on account.
• Using the wrong payment reference, so the money is not matched to the disclosure.

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Related Accountapedia entries

• What happens after you make a voluntary disclosure
• Paying voluntary Class 3 contributions
• Making a voluntary disclosure to HMRC
• Voluntary VAT registration
• Paying voluntary NI from abroad after April 2026

Sources

• GOV.UK: Your guide to making a disclosure
• GOV.UK: Rates and allowances hmrc interest rates
• GOV.UK: Compliance checks for penalties of inaccuracies in returns or document
• GOV.UK: Worldwide disclosure facility make a disclosure
• GOV.UK: Pay tax on cryptoassets
• GOV.UK: Difficulties paying hmrc

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.