How often does the UOMI rate change?

The Commissioner-set UOMI rates change by Order in Council when the underlying market interest-rate benchmarks shift materially. In practice that has meant several adjustments per year during periods of OCR change and longer flat periods when rates were stable. There is no fixed quarterly cycle, but the IRD penalties-and-interest page is the live source for both the current rate and the historical schedule.

UOMI is calculated daily on the unpaid balance and compounded daily. That means each day’s interest is added to the principal and the next day’s interest is calculated on the new total. The longer a shortfall sits unpaid, the faster the balance grows — particularly when combined with the 1% monthly incremental late-payment penalty.

Can UOMI be remitted?

UOMI can be remitted in limited circumstances — typically genuine error, a system or natural-event disruption, or where remission is in the interests of fair and efficient tax collection. Remission is discretionary and requested in writing. It is not granted for general financial hardship or for forgetting a due date; a payment arrangement is the more usual route in those cases.

What is the difference between UOMI and the 1% / 4% late-payment penalties?

UOMI is interest charged on the unpaid tax from the day after the due date until the day it is paid. The late-payment penalties are separate one-off charges: 1% the day after the due date, and a further 4% if the tax (plus the 1%) is still unpaid 7 days after the due date. UOMI continues to accrue daily on top of both penalties.

Penalties & interest Published 2026-06-06 · 6 min read

NZ UOMI rate — IRD Use-of-Money Interest on tax

By the TaxAccountants.co.nz editorial team · Published 2026-06-06

What Use-of-Money Interest is, how the rate is set, how it accrues from the day after a tax due date, and how it interacts with the 1% and 4% late-payment penalties. The live rate sits on the IRD page linked below — we do not freeze a number here.

In one paragraph

UOMI (Use-of-Money Interest) is the interest IRD charges on unpaid tax from the day after the due date until the day it is paid. The rate is set by Order in Council and changes when underlying market rates move materially. A separate, lower UOMI rate is paid by IRD on overpayments. UOMI sits alongside — not instead of — the 1% and 4% late-payment penalties. Live rate: IRD — penalties and interest.

How the rate is set

UOMI rates are prescribed by Order in Council under the Tax Administration Act. There are two rates at any time: the rate IRD charges on tax shortfalls and the (lower) rate IRD pays on overpayments. Both move when the Cabinet-approved Order updates them — typically following sustained moves in market benchmark rates. The current and historical schedule are published on IRD’s penalties-and-interest page. Source: IRD — penalties and interest.

When UOMI starts to run

UOMI accrues from the day after the original due date of the tax and stops the day the tax is paid in full. It applies to most tax types administered by IRD — income tax, GST, PAYE, FBT, RWT — though the rules around provisional tax have their own safe-harbour and standard-method nuances. Source: IRD — managing my tax.

UOMI vs late-payment penalties — they stack

The 1% / 4% late-payment penalties and UOMI are separate charges, not alternatives. A tax that is one day late attracts the 1% penalty immediately. If it is still unpaid 7 days after the due date, a further 4% is added to the unpaid balance (tax + 1% penalty). UOMI continues to run daily on the entire unpaid balance throughout. Source: IRD — penalties and interest.

UOMI charged vs UOMI paid

When you owe IRD, the higher charged rate applies. When IRD owes you (because you overpaid provisional tax, for example) the lower paid rate applies. The gap between the two is intentional — it reflects the credit and funding spread and removes any incentive to use IRD as a savings account. Both rates move in the same Order in Council.

Worked sketch — a $10,000 shortfall

Imagine a $10,000 terminal-tax shortfall that sits unpaid for 60 days before it is cleared. The 1% late-payment penalty adds $100 on day 1. If the balance is still outstanding on day 7, a further 4% ($404, applied to $10,100) adds $404. UOMI then runs daily on the full unpaid balance for the remaining 53 days. Use our UOMI calculator with the live charged rate from IRD to estimate your own number — the calculator asks you to enter the rate so the page never goes stale.

Related on TaxAccountants.co.nz

UOMI calculator — enter the live rate and your shortfall.
NZ income tax rates 2026 — brackets that drive terminal tax.
NZ GST rate — late GST attracts the same UOMI + penalties.
Student loan repayment threshold — interest-free for NZ-based borrowers, separate from UOMI.

Sitting on an IRD shortfall?

UOMI plus the 1% / 4% penalties compound quickly. A negotiated instalment arrangement or a remission request needs to be put together before the next penalty stage triggers. We refer every quote request to Lynch & Associates, our Auckland partner firm of CAANZ-member accountants and IRD-registered tax agents, who will reply within one business day.

Get a quote — free for users

Sources

Editorial note: We deliberately do not freeze a UOMI rate number on this page. The rate is set by Order in Council and moves several times a year. Verified 2026-06-06.

Disclosure: TaxAccountants.co.nz is an introduction service. Quote requests are referred to Lynch & Associates Chartered Accountants.