If you cannot pay your tax bill on time
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1. Overview
Contact HM Revenue and Customs (HMRC) as soon as possible if you:
- have missed a tax deadline
- know you will not be able to pay a tax bill on time
This guide is also available in Welsh (Cymraeg).
If you cannot pay your tax bill in full, you may be able to set up a payment plan to pay it in instalments. This is called a ‘Time to Pay’ arrangement.
You will not be able to set up a payment plan if HMRC does not think you will keep up with the repayments. If HMRC cannot agree a payment plan with you, they’ll ask you to pay the amount you owe in full.
2. Setting up a payment plan
To set up a payment plan you’ll need:
- the relevant reference number for the tax you cannot pay, such as your unique tax reference number
- your UK bank account details - you must be authorised to set up a Direct Debit
- details of any previous payments you’ve missed
You may be able to set up a payment plan online, depending on which type of tax you owe and how much you owe.
If you owe tax from Self Assessment
You can set up a Self Assessment payment plan online if you:
- have filed your latest tax return
- owe £30,000 or less
- are within 60 days of the payment deadline
- do not have any other payment plans or debts with HMRC
HMRC will ask you about your income and spending when you set up your plan.
If you owe employers’ PAYE contributions
You can set up an employers’ PAYE payment plan online if you:
- have missed the deadline to pay an employer PAYE bill
- owe £50,000 or less
- plan to pay your debt off within the next 12 months
- have debts that are 5 years old or less
- do not have any other payment plans or debts with HMRC
- have sent any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due
If you owe tax from VAT
You can set up a VAT payment plan online if you:
-
have missed the deadline to pay a VAT bill
-
owe £50,000 or less
-
plan to pay your debt off within the next 12 months
-
have a debt for an accounting period that started in 2023 or later
-
do not have any other payment plans or debts with HMRC
-
have filed all your tax returns
You cannot set up a VAT payment plan online if you’re in the Cash Accounting Scheme, Annual Accounting Scheme, or you make payments on account.
If you cannot set up a payment plan online
You’ll need to contact HMRC.
They will ask you:
- if you can pay in full
- how much you can repay each month
- if there are other taxes you need to pay
- how much money you earn
- how much you usually spend each month
- what savings or investments you have
If you have savings or assets, HMRC will expect you to use these to reduce your debt as much as possible.
If you’ve received independent debt advice, for example from Citizens Advice, you may have a ‘Standard Financial Statement’. HMRC will accept this as evidence of what you earn and spend each month.
If your company is in tax debt
HMRC will ask you to propose how you’ll pay your tax bill as quickly as you can. They will ask questions about your proposal to make sure it is realistic and affordable for you.
You must reduce your debt as much as possible before setting up a payment plan. You can do this by releasing assets like stock, vehicles and shares.
HMRC may ask company directors to:
- put personal funds into the business
- accept lending
- extend credit
3. How much you'll pay
The amount you’ll be asked to pay each month will be based on how much you have left after you pay any rent, food or utility bills and fixed outgoings you have, like subscriptions.
You’ll usually be asked to pay around half of what you have left over each month towards the tax you owe.
You can also agree to pay more if you want. Paying your debt quicker means you’ll pay less in total because you’ll pay less interest.
If you get a pension, HMRC will count that as income, but will not count the amount in your pension pot as savings.
How long your payment plan lasts
There’s no time limit on how long a payment plan can last. It will depend on how much you owe and what you can afford to pay each month.
You should contact HMRC if anything changes that could affect your payment plan. You can make the payment plan longer or shorter.
If HMRC finds out that your circumstances have changed, they may contact you to discuss changing your repayments.
If you miss a payment
HMRC will contact you to find out why. Where possible, they’ll try to rearrange or renegotiate the payment plan with you.
If you cannot pay another tax bill, contact HMRC. You may be able to include the new tax bill in your Time to Pay arrangement.
4. If you do not contact HMRC or refuse to pay
HM Revenue and Customs (HMRC) will always try to contact you if you miss a tax payment. This can include sending you letters, texts and visiting you at home or at work.
If you do not get in contact with HMRC or cannot agree an instalment plan then HMRC may:
- ask a debt collection agency to collect the money
- collect what you owe directly from your wages or any monthly pension payments you get
- take things you own and sell them (if you live in England, Wales or Northern Ireland)
- take money directly from your bank account or building society savings (if you live in England, Wales or Northern Ireland)
- take you to court
- make you bankrupt
- close down your company if the tax is a business tax
Any costs, like auction fees, are normally added to your debt. HMRC will tell you before taking any of these actions and will explain your rights, costs and options.
Read more about actions HMRC can take to recover tax.
5. Help and advice
If you’re in England or Wales, Money Helper can give you more information about debt management and where to get free debt advice.
If you’re in Scotland, you can get free debt advice from Scotland Debt Solutions.
If you’re in Northern Ireland, you can get free debt advice from Advice NI.
Making a complaint
You cannot appeal against HM Revenue and Customs’ (HMRC) decision, but you can make a complaint if you’re unhappy about how you were treated.