Use of Money Interest Calculator NZ

This calculator estimates the use of money interest, and the rough cost of late-payment penalties, that Inland Revenue can charge when tax is paid late or underpaid, a cost that catches out many provisional taxpayers and the self-employed. You enter the amount of tax owed and the period it is overdue, and the tool projects how the interest accrues over time so you can see the real cost of paying late versus arranging an instalment plan. Because the rates are set by Inland Revenue and change over time, the calculator is built to take the current rate as an input rather than hard-coding it. The breakdown shows the original tax, the accruing interest, and the running total, helping you decide whether to prioritise clearing a tax debt and understand why engaging early with Inland Revenue is so valuable.

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$
%
$8,840.89
total owed including interest and any penalties
Original tax$8,000.00
Use of money interest$440.89
Penalties$400.00

The UOMI taxpayer rate is set by Inland Revenue and changes over time, so enter the current rate. Late payment penalties are commonly an initial charge plus a further charge if still unpaid after a set period, modelled here as a simple 1% plus 4%. This is an estimate and general information, not tax advice. Contact Inland Revenue early to arrange a plan if you cannot pay.

How it works

Use of money interest is charged on the unpaid tax for every day it is overdue, compounding daily at the taxpayer rate Inland Revenue sets. The calculator grows the tax owed by the daily rate across the number of overdue days to find the interest. If you include penalties, it adds a simple initial late payment penalty and a further penalty as a rough guide. The result is the total you would owe, helping you see why a tax debt left unpaid grows steadily and why paying or arranging a plan early matters.

Worked example

On $8,000 of tax overdue for 180 days at a 10.88% annual rate, the daily compounding interest adds roughly $430. With late payment penalties of 1% plus 4%, a further $400 is added, bringing the total to around $8,830. The longer it is left, the more it grows.

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Data sources: the rates and thresholds on this page are maintained against Inland Revenue. Figures are checked twice monthly.

Frequently asked questions

What is use of money interest?

Use of money interest, or UOMI, is interest Inland Revenue charges when tax is paid late or underpaid, and pays when you have overpaid. The taxpayer rate is set by Inland Revenue and changes over time, and it generally compounds daily.

How is late tax interest calculated?

Interest is charged on the unpaid tax for each day it is overdue, compounding daily at the current taxpayer rate. Late payment penalties can also apply on top. This calculator estimates both from the amount, the days overdue, and the rate you enter.

How do I avoid use of money interest?

Pay tax on time, or if you cannot, contact Inland Revenue early to arrange an instalment plan, which can reduce or stop further penalties. Setting money aside through the year, especially for provisional tax, is the best prevention.