Can’t Pay Your Tax Bill? HMRC Time to Pay Guide 2026

If you cannot pay a UK tax bill on time, contact HMRC before the deadline or as soon as possible afterwards. File the return on time even when you cannot pay. HMRC may agree a Time to Pay arrangement based on what you can afford, while interest and potentially penalties continue to apply.

First steps

1. Submit the return. A missing return creates separate late-filing penalties and prevents the exact debt being established.
2. Pay what you can. A part-payment reduces interest and the balance considered for an arrangement.
3. Review the calculation. Check payments on account, PAYE credits, CIS deductions and earlier payments.
4. Contact HMRC. Do not wait for enforcement letters if you already know payment will be difficult.

Can you set up a Time to Pay arrangement online?

Some Self Assessment taxpayers can set up a payment plan online after filing, subject to HMRC’s current eligibility conditions, including limits on the amount owed, filing status and the age of the debt. If the online service does not offer an arrangement, contact HMRC’s Payment Support Service or the office shown on the demand.

Eligibility thresholds and digital-service rules can change, so use the live GOV.UK checker rather than relying on an old monetary limit.

What information will HMRC ask for?

• the amount and type of tax owed;
• why it cannot be paid on time;
• income, essential household or business expenditure and available cash;
• assets, savings and borrowing options;
• other taxes due soon;
• how much can be paid immediately and each month;
• bank details for Direct Debit.

Propose an affordable amount supported by a realistic cash-flow forecast. An arrangement that immediately fails can make enforcement more likely.

Interest and late-payment penalties

HMRC normally charges late-payment interest from the original due date until payment, including during a Time to Pay plan. Self Assessment late-payment penalties can arise at 30 days, 6 months and 12 months, generally based on the unpaid amount, subject to reasonable excuse and Time to Pay rules.

A plan agreed before the relevant penalty trigger can protect against certain penalties if its conditions are followed, but it does not normally stop interest.

File even if the figures are incomplete

Use provisional figures where the tax rules allow and clearly identify them, then amend the return promptly. An on-time provisional return is often better than waiting for perfect information and incurring an automatic filing penalty. Do not knowingly submit unsupported figures.

Can payments on account be reduced?

If the current year’s Income Tax and Class 4 National Insurance will genuinely be lower, you can claim to reduce payments on account. This is not a general payment deferral. If reduced below the amount ultimately due, interest runs on the shortfall from the original due date.

Read how payments on account work.

Which debts need separate action?

Self Assessment, PAYE, VAT and Corporation Tax can have different teams, references and arrangement processes. A plan for one debt does not automatically cover another. Confirm in writing which liabilities and due dates are included.

What if the business is viable but temporarily short of cash?

• prepare a 13-week cash-flow forecast;
• collect overdue customer invoices;
• stop non-essential drawings or dividends;
• review stock, subscriptions and discretionary spending;
• consider commercial finance only after comparing costs and affordability;
• reserve new VAT, PAYE and tax amounts so arrears do not grow.

Do not use tax money to continue a business that has no realistic path to solvency without taking professional advice.

Sole traders and personal financial difficulty

A sole trader is personally responsible for business tax debts. Free debt advice is available from organisations such as Business Debtline, Citizens Advice and StepChange. Be cautious about firms requesting large upfront fees or promising to erase HMRC debt.

Limited companies

Directors should act promptly if a company cannot pay taxes as they fall due. Continuing to trade, preferring some creditors or taking money from an insolvent company can create serious risks. Speak to a licensed insolvency practitioner where insolvency may be involved.

What happens if you ignore HMRC?

HMRC can use debt-collection agencies, deduct money from wages or bank accounts in qualifying cases, take control of goods, pursue court action, petition for bankruptcy or seek company winding-up. Early engagement usually offers more options.

After agreeing a plan

1. Keep every current return and new tax payment up to date.
2. Maintain the Direct Debit and sufficient bank funds.
3. Retain the agreement reference and payment schedule.
4. Contact HMRC before missing an instalment if circumstances worsen.
5. Pay early where possible to reduce interest.

Official help

• HMRC: problems paying tax
• HMRC: Self Assessment payment plans
• HMRC: reasonable excuses

This is general information. Seek debt or insolvency advice promptly where the problem is not temporary.