Can I pay my tax bill in instalments to HMRC?

Yes — HMRC offers Time to Pay arrangements that let you spread your tax bill over monthly instalments, typically up to 12 months. For Self Assessment debts up to £30,000, you can set up a payment plan online without speaking to anyone. For larger debts or other tax types, call the HMRC Payment Support Service on 0300 200 3835 to negotiate terms.

Will HMRC charge interest on a Time to Pay arrangement?

Yes — interest is charged on the outstanding balance from the original due date until the debt is fully paid. The current late payment interest rate is the Bank of England base rate plus 2.5%. You may also face a late payment penalty if you didn't arrange the payment plan before the deadline. However, HMRC will not take enforcement action while a Time to Pay arrangement is in place.

Can I set up an HMRC payment plan online?

Yes — for Self Assessment debts up to £30,000 that are less than 60 days overdue. Go to gov.uk/difficulties-paying-hmrc and follow the Self Assessment payment plan route. You'll need your Government Gateway login, your SA302 (tax calculation), and a debit card for direct debit. For debts over £30,000 or other tax types, you must call HMRC.

What happens if I can't pay my tax bill at all?

Contact HMRC immediately — do not ignore the debt. HMRC has a range of options including payment plans, reduced payments, and in some cases writing off debts where there is genuine hardship. If you ignore HMRC, they can use debt collectors, take money directly from your bank account (Direct Recovery of Debts), or make you bankrupt. Always engage — HMRC is more lenient with people who communicate.

HMRC Time to Pay — How to Set Up a Payment Plan for Tax You Owe | PocketWise

If you owe tax to HMRC and cannot pay the full amount by the deadline, a Time to Pay (TTP) arrangement lets you spread the bill over monthly instalments. Here is how it works for every type of tax.

What Is a Time to Pay Arrangement?

Detail	Information
What it is	An agreement with HMRC to pay your tax bill in monthly instalments
Typical duration	Up to 12 months (sometimes longer in exceptional cases)
Interest?	Yes — charged from the original due date
Penalties?	May still apply, but HMRC won’t take enforcement action while TTP is in place
Who can use it	Anyone who owes tax and can’t pay in full by the due date
Cost to apply	Free

Self Assessment — Payment Plan

Online Self-Service (Quick Route)

You can set up a payment plan online without calling HMRC if:

Condition	Requirement
Tax type	Self Assessment only
Amount owed	Up to £30,000
Time overdue	Less than 60 days past the payment deadline
Tax returns	All returns filed and up to date
No existing TTP	You don’t already have an ongoing payment plan

Step	Action
1	Go to gov.uk/difficulties-paying-hmrc
2	Select Self Assessment
3	Sign in with Government Gateway
4	Choose your instalment plan (monthly amounts and duration)
5	Set up a direct debit
6	Plan takes effect immediately

By Phone (For Larger Debts)

Condition	Detail
Amount owed	Over £30,000 or more than 60 days overdue
Phone number	0300 200 3835 (Payment Support Service)
Opening hours	Monday to Friday 8am–6pm
What to have ready	Your tax reference, details of what you owe, your income and expenses, and a proposal for monthly payments

How Much Will You Pay?

Interest

Detail	Rate
Late payment interest rate	Bank of England base rate + 2.5%
Current rate (March 2026)	Approximately 7.0%
Charged from	The original due date (not the date you set up the plan)
On what	The outstanding balance — reduces as you make payments

Worked Example — £5,000 Self Assessment Debt

Detail	Amount
Tax owed	£5,000
Payment plan	12 monthly instalments
Monthly payment	~£417 + interest
Interest over 12 months	~£200 (approximate)
Total paid	~£5,200

Penalties

Penalty	When it applies
Late payment penalty (30 days)	5% of tax unpaid 30 days after deadline
Late payment penalty (6 months)	Additional 5% if still unpaid at 6 months
Late payment penalty (12 months)	Additional 5% if still unpaid at 12 months
Total potential penalties	Up to 15% of the tax owed

Setting up a Time to Pay arrangement before the deadline may help you avoid some penalties. If you know you can’t pay, act early.

Other Tax Types

PAYE (Employer)

Detail	Information
Who	Employers who can’t pay PAYE/NI on time
Route	Call 0300 200 3835
Duration	Typically up to 12 months
Consequences of not paying	HMRC can issue penalties, charge interest, and ultimately wind up the company

VAT

Detail	Information
Who	VAT-registered businesses that can’t pay their VAT bill
Route	Call 0300 200 3835
Duration	Negotiated — depends on amount and circumstances
Important	Continue filing VAT returns on time even if you can’t pay

Corporation Tax

Detail	Information
Who	Limited companies that can’t pay their Corporation Tax
Route	Call 0300 200 3835
Duration	Negotiated
Important	File your CT600 return by the deadline regardless

Related: Self-Employment Tax Guide

What HMRC Will Ask

When you call to arrange a Time to Pay plan, HMRC will want to understand your financial situation:

They will ask about	Why
Your total income (all sources)	To assess what you can afford
Your essential expenses (rent/mortgage, food, utilities, travel)	To calculate disposable income
Your assets (savings, property, investments)	To check whether you could pay from other sources
Your other debts	To understand your overall financial position
Why you can’t pay	To assess genuine hardship vs. unwillingness
Your proposed monthly payment	HMRC wants to know you’ve thought about it

Tip: Prepare a simple income and expenditure statement before calling. Know your numbers. The more prepared you are, the smoother the call.

What Happens If You Don’t Pay (And Don’t Arrange TTP)

Stage	Action HMRC takes
Missed deadline	Interest starts accruing immediately
30 days late	First late payment penalty (5%)
Letters and reminders	HMRC sends increasingly firm correspondence
6 months late	Second penalty (additional 5%)
Debt collection	HMRC uses private debt collectors or its own teams
County Court Judgment	HMRC can apply for a CCJ — damages your credit file
Direct Recovery of Debts	HMRC can take money directly from your bank account (for debts over £1,000 if you have £5,000+ in your account)
Distraint	HMRC can seize and sell your possessions
Bankruptcy/winding up	For serious debts, HMRC can petition to make you bankrupt or wind up your company

The message is clear: Always contact HMRC before the deadline if you can’t pay. They are far more willing to work with people who engage early.

Tips for a Successful Arrangement

Tip	Detail
Contact HMRC early	Before the payment deadline if possible
File your tax return on time	Even if you can’t pay — this avoids late filing penalties
Propose realistic payments	Don’t promise more than you can afford — broken plans lead to enforcement
Set up a direct debit	HMRC prefers this — and it prevents missed instalments
Keep making payments	If your circumstances change, call HMRC to renegotiate — don’t just stop paying
Consider borrowing?	A 0% credit card or personal loan may be cheaper than HMRC interest + penalties
Get help	If your debt is serious, contact TaxAid (free tax advice for low-income people) or your accountant

Self Assessment Key Dates 2026/27

Date	Deadline
5 October 2026	Register for Self Assessment if newly self-employed
31 October 2026	Paper tax return deadline
31 January 2027	Online tax return deadline AND first payment on account
31 January 2027	Balance of 2025/26 tax due
31 July 2027	Second payment on account

If you know you’ll owe tax: Consider saving monthly into a separate account so the bill is not a shock. Put aside 25%–30% of your self-employed income for tax.

Where to Get Help

Organisation	What they do	Contact
HMRC Payment Support Service	Arrange Time to Pay	0300 200 3835
TaxAid	Free tax advice for low-income people	taxaid.org.uk or 0345 120 3779
Tax Help for Older People	Free tax advice for over-60s	taxvol.org.uk or 0345 601 3321
Citizens Advice	General debt and tax advice	citizensadvice.org.uk
StepChange	Free debt advice	0800 138 1111
Your accountant	Professional tax advice	Your regular adviser

HMRC Time to Pay — How to Set Up a Payment Plan for Tax You Owe

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