Technical Guidance on Interest for Welsh Tax Collection and Management Act 2016

WRA interest on late tax payments and repayments

The Welsh Revenue Authority can charge simple interest when tax or penalties are paid late, and it can also pay simple interest when it repays tax, penalties or interest already paid. In most cases, interest on underpaid tax runs from the original filing deadline, not from the later date when the WRA corrects, amends or assesses the amount.

• Late payment interest on tax usually starts on the day after the return filing date, or the day after the filing date that should have applied if no return was filed.
• This timing can apply even where the extra tax is only identified later through a taxpayer amendment, WRA correction, WRA amendment, assessment or determination.
• Interest on unpaid penalties runs from the date the penalty was due until it is paid in full.
• Late payment interest is simple interest at Bank of England base rate plus 2.5%; repayment interest is simple interest at the higher of 0.5% or the Bank of England rate.
• Repayment interest runs from the later of the date the taxpayer paid the amount and the date it became payable to the WRA, ending when the WRA makes the repayment.
• A special rule may delay the start of late payment interest where the taxpayer dies before the amount becomes due and the executor cannot pay until probate or letters of administration is obtained.

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WRA interest on late payment and repayments under the Tax Collection and Management (Wales) Act 2016

This page explains when the Welsh Revenue Authority (WRA) charges interest for late payment, and when it pays interest on repayments. The rules matter because interest can arise automatically even where the tax itself is later corrected, assessed or repaid. The source material covers devolved taxes administered by the WRA, including Land Transaction Tax.

What this rule is about

Part 6 of the Tax Collection and Management (Wales) Act 2016 deals with interest. In broad terms, there are two sides to it.

First, if tax or a penalty is paid late, the WRA charges interest for the period of delay.

Second, if the WRA repays tax, penalties or interest that was previously paid, it may have to pay repayment interest for the period the money was held.

The guidance is technical, but the practical point is simple: once an amount is due, the clock may start running. It is therefore important to identify exactly what amount is in question, when it became due, and whether the payment or repayment date changes the interest position.

What the official source says

The WRA charges late payment interest on unpaid tax from the relevant late payment interest start date until the date the tax is paid.

For tax, the start date depends on how the amount arose, but in the cases listed in the guidance it is generally the day after the filing date for the return, or if no return was made when required, the day after the filing date when the return should have been made.

The guidance specifically covers these situations:

• an amount shown in a tax return
• an amount shown in a taxpayer amendment to a return
• an amount shown in a WRA correction notice
• an amount shown in a WRA amendment to a return
• an amount shown in a WRA assessment
• an amount shown in a WRA determination where no return was made
• an amount shown in a WRA assessment where no return was made

In each case, the interest start date is tied back to the filing date, not the later date when the correction, amendment, determination or assessment is issued.

The date of payment can include the date an amount is set off against money payable by the WRA to the taxpayer.

The interest is simple interest, not compound interest. That means interest runs only on the unpaid tax itself, not on interest that has already accrued.

For late payment of tax, the annual rate is Bank of England rate plus 2.5%, as set by the Tax Collection and Management (Administration) (Wales) Regulations 2018.

If a taxpayer dies before an amount becomes due and payable, and the executor cannot pay before obtaining probate or letters of administration, the late payment interest start date is deferred. In that case, it is the later of:

• the date interest would otherwise have started, and
• the day after 30 days beginning with the grant of probate or letters of administration

For penalties, the WRA charges interest on an unpaid penalty from the date the penalty was due to be paid until the day it is paid. An unpaid penalty means one not paid in full by the due date. The annual rate is again Bank of England rate plus 2.5%.

For repayments, the WRA pays interest on repayments of:

• tax
• penalties
• interest previously paid on tax or penalties

The guidance also states that the repayment must relate to devolved taxes or penalties. It says the WRA will not repay amounts paid to it in error.

Repayment interest starts on the later of:

• the date the taxpayer made the payment, and
• the date the amount became payable to the WRA

Repayment interest ends on the date the WRA makes the repayment.

Repayment interest is also simple interest. The annual rate is the higher of 0.5% and the Bank of England rate.

What this means in practice

The main practical point is that interest usually follows the original due date, not the date when the amount is later agreed or formally assessed.

For example, if too little tax was shown on a return and the shortfall is later identified through an amendment or assessment, the guidance indicates that late payment interest can still run from the day after the original filing date. This can catch taxpayers by surprise, especially where they assume interest starts only when HMRC or the WRA formally raises the issue.

For conveyancers and taxpayers dealing with Land Transaction Tax, this means timing matters. If there is any doubt about the amount due, it is worth understanding whether an underpayment may already be accruing interest from the original filing deadline.

The same theme applies to penalties. Once a penalty is due and remains unpaid, interest runs until payment is made in full.

On the other side, if the WRA has to repay tax, penalties or interest previously paid, repayment interest may be due. But the start date is not always the date the money was physically paid over. It is the later of the payment date and the date the amount became payable to the WRA. That prevents interest running for a period before the WRA was legally entitled to the money.

The guidance also makes clear that interest is simple, not compound. That limits how quickly the amount grows. Interest is charged or paid only on the principal amount being considered.

How to analyse it

A sensible way to approach these rules is to ask the following questions.

1. What type of amount is involved?
   • unpaid tax
   • unpaid penalty
   • a repayment of tax, penalty or previously paid interest
2. How did the amount arise?
   • from the original return
   • from a taxpayer amendment
   • from a WRA correction or amendment
   • from an assessment or determination
   • from a failure to file a return
3. What is the legally relevant start date for interest?
   • for late-paid tax, usually the day after the filing date or the day after the filing date when the return should have been made
   • for late-paid penalties, the date the penalty was due to be paid
   • for repayments, the later of the payment date and the date the amount became payable
4. When did payment or repayment actually occur?
   • include any set-off date if the amount was credited against money payable by the WRA
5. Is there any special rule affecting the start date?
   • for example, death of the taxpayer before the amount became due, where probate or letters of administration delayed payment
6. What rate applies?
   • late payment interest on tax or penalties: Bank of England rate plus 2.5%
   • repayment interest: higher of 0.5% or Bank of England rate

This framework helps separate three issues that are often blurred together: when the tax liability arose, when it became due, and when interest starts.

Example

This is an illustration based on the guidance.

A taxpayer files an LTT return but understates the tax. Months later, the WRA amends the return and identifies extra tax due. The taxpayer may think interest should run only from the amendment date. Under the guidance, that is not how the rule works. If the extra amount is stated in a WRA amendment to the return, the late payment interest start date is the day after the original filing date for the return. Interest then runs until the extra tax is paid.

By contrast, if the taxpayer had overpaid tax and the WRA later repays it, repayment interest would run from the later of the date the taxpayer paid the amount and the date it became payable to the WRA, ending when the WRA makes the repayment.

Why this can be difficult in practice

The hardest issue is often identifying the correct start date.

The guidance ties many later adjustments back to the original filing date. That can feel counterintuitive where the amount was only established later. But the source material is clear that, for the listed categories, the interest start date is linked to the filing deadline rather than the later administrative step.

Another point that may need care is the statement that the WRA will not repay amounts paid to it in error. That wording appears in guidance about repayment interest. On its face, it means the repayment interest rules described there apply to repayments of devolved taxes, penalties and related interest, rather than every mistaken payment received by the WRA. The precise treatment of payments made in error may therefore depend on the wider statutory framework, not this guidance page alone.

The executor rule is also fact-sensitive. It applies only where the taxpayer dies before the amount becomes due and payable, and the executor is unable to pay before obtaining probate or letters of administration. Whether those conditions are met may depend on the facts.

Finally, because the rates are linked to the Bank of England rate, the actual amount of interest depends on the rate applicable during the relevant period under the regulations.

Key takeaways

• Late payment interest on WRA tax liabilities usually runs from the day after the relevant filing date, even if the amount is only established later by amendment, correction, determination or assessment.
• Interest on unpaid penalties runs from the penalty due date until payment, and both tax and penalty interest are charged at Bank of England rate plus 2.5%.
• Repayment interest is simple interest, runs from the later of payment and the date the amount became payable to the WRA, and is paid at the higher of 0.5% or the Bank of England rate.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Technical Guidance on Interest for Welsh Tax Collection and Management Act 2016

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