HMRC Time to Pay Guide

HMRC Time to Pay spreads an overdue tax bill into monthly Direct Debit instalments. For a Self Assessment debt of £30,000 or less, you may be able to set it up online if your returns are filed and you have no other tax debts or HMRC payment plans. Otherwise, you contact HMRC.

Interest keeps running on anything paid late, plan or no plan. What a time to pay arrangement (TTP for short) changes is the penalty side. Once HMRC agrees to defer payment, you’re not liable for late payment penalties from the date you asked until the plan ends, provided you keep to it.

Whether HMRC time to pay can start online depends on how much you owe, which tax it is and whether you’ve filed your return, along with any other tax debts or plans you already have.

Each one changes which route below applies and what you’ll be asked for. Where no plan can be agreed at all, HMRC will ask you to pay the full amount.

HMRC time to pay online covers Self Assessment

For Self Assessment, you set the plan up yourself through the HMRC Self Assessment payment plan service, with no call needed. Before it will build a self assessment payment plan, the service checks four conditions:

• Each Self Assessment return that’s due has been filed.
• The total you owe is £30,000 or less, so exactly £30,000 still qualifies.
• You don’t owe any other tax on top of this bill.
• You don’t already have another HMRC payment plan running.

You’ll need to be named on the UK bank account the Direct Debit comes from, and able to authorise it without anyone else’s signature. The instalments include interest at the Bank of England base rate plus 4%.

This route lets you pay tax in instalments once a Self Assessment bill is overdue. If the bill isn’t due yet, an HMRC budget payment plan runs in the opposite direction, collecting regular weekly or monthly Direct Debits ahead of your next Self Assessment bill, provided you’re up to date with the last one.

Above £30,000, set up a payment plan with HMRC

Owing more than £30,000 doesn’t rule a plan out. HMRC’s position is that you can still apply if you owe more, or need a longer repayment period, but you’ll need to contact HMRC directly.

For Self Assessment, the number is 0300 123 1813, open 8am to 6pm, Monday to Friday. For other taxes, GOV.UK’s guide to paying in instalments explains how to reach HMRC and links to its online eligibility check.

Have three things ready before you call: the reference number for the tax (your UTR for Self Assessment), UK bank details you can set up a Direct Debit on, and figures for your income and spending. Where the debt is company tax, those figures are the company’s.

Expect questions about whether you could pay in full, what you could manage each month, any other tax you owe, and what you earn, spend and have saved.

Anyone who’s been through independent debt advice may already hold a Standard Financial Statement. HMRC takes that document as evidence of your monthly income and outgoings.

You’ll usually pay about half your spare income

HMRC bases the monthly figure on your leftover money: whatever remains once rent, food, utilities and regular fixed costs (subscriptions, for instance) are covered.

The usual monthly request is around half of that leftover.

A pension you’re drawing counts as income, but the money sitting in a pension pot isn’t treated as savings. Other savings and assets are different, and HMRC will expect them to be used to bring the debt down as far as possible.

An HMRC payment plan has no fixed time limit. Its length follows from the size of the debt and the monthly amount you can manage, and you can ask for it to be made longer or shorter if your circumstances change.

You can also choose to pay more than you’re asked. The debt clears sooner and costs less in total, because you’re paying less interest.

Company time to pay arrangement: cut the debt first

Where a company owes the tax, HMRC wants to know how the bill will be paid as quickly as the business can manage, and it’ll question the proposal to check it’s realistic and affordable.

Before a plan is agreed, the company has to reduce the debt as far as it can, for example by releasing assets like stock, vehicles or shares. HMRC may also look to the directors personally:

• A director can be asked to put personal money into the business.
• A director can be asked to take on lending.
• A director can be asked to extend credit.

If the company and HMRC can’t agree a time to pay arrangement, HMRC will ask for the full amount instead.

HMRC time to pay pauses penalties, not interest

Interest and penalties are separate charges, and a plan treats them differently.

Interest runs on every pound unpaid after the deadline at the Bank of England base rate plus 4%. The late payment interest rate has been 7.75% a year since 9 January 2026, and it moves when the base rate does.

For Self Assessment, a 5% late payment penalty lands on any tax for the year still unpaid more than 30 days after that year’s 31 January balancing payment deadline. Two further 5% charges follow if it’s still outstanding 5 months and 11 months after that first penalty date.

HMRC’s own manual describes that 30-day gap as time for people who can’t pay to contact HMRC and arrange a way of paying. Once HMRC agrees to defer payment, you aren’t liable to late payment penalties on that tax from the date you asked until the agreed period ends. Break the agreement and HMRC can charge them after all.

Here’s what interest looks like on a £6,000 Self Assessment bill due on 31 January 2027, with payments starting at the end of February and the rate held at 7.75% throughout:

• Paying £500 a month for 12 months adds roughly £247 in interest.
• Paying £1,000 a month for 6 months cuts that to about £130.
• Leaving it unpaid and unagreed past day 30 adds a £300 penalty on top of the interest.

HMRC’s own figure may differ slightly, since it depends on exact payment dates and any rate change. The deadlines themselves are set out in the guide on how to pay your Self Assessment tax.

A missed TTP payment brings contact before enforcement

Miss an instalment and HMRC will get in touch to find out why. If it can, HMRC will look at reworking the payment schedule with you.

A new bill you can’t pay works the same way. Tell HMRC, and it may be possible to fold the new amount into your existing plan.

Things escalate when there’s no contact or no agreement. At that point, HMRC’s options include:

• The debt can be handed to a collection agency.
• The debt can be collected from your wages or from monthly pension payments.
• In England, Wales and Northern Ireland, your belongings can be taken and sold, and money can be taken directly from your bank or building society account.
• You can be taken to court or made bankrupt, and a company can be closed down if the debt is a business tax.

None of these steps comes out of the blue: HMRC tells you first and sets out your rights, what it’ll cost and what you can still do.

Your next step with HMRC time to pay

If you owe £30,000 or less on Self Assessment, with your returns filed and no other debts or plans, the online service is where HMRC time to pay starts. Anything bigger, or any other tax, starts with HMRC’s eligibility check or a call.

Either way, work out your spare income before you apply, since around half of it is what you’ll usually be asked to pay each month.

For Self Assessment, penalty suspension only runs from the date you ask, so asking before the 30-day point matters. Interest keeps running whatever you agree, so paying more when you can keeps the total down.

If you’d like to talk it through with someone independent first, the free tax help page covers free, independent tax advice, including the TaxAid charity.

Key Takeaways

• HMRC Time to Pay spreads an overdue tax bill into monthly Direct Debit instalments, with interest charged throughout.
• You may be able to set it up online for a Self Assessment debt of £30,000 or less if your returns are filed and you have no other tax debts or HMRC payment plans.
• HMRC usually asks for around half of what’s left each month after essential and fixed costs, and a plan has no set time limit.
• Once HMRC agrees a plan, late payment penalties are suspended from the date you asked, as long as you keep to the agreement.
• A missed payment leads HMRC to contact you and try to rearrange the plan, and enforcement options come into play where there’s no contact or no agreement.