Can You Pay HMRC Tax in Instalments?
Understand HMRC payment plans, Time to Pay arrangements and what to do if you cannot pay your tax bill on time.
In brief
In some cases, HMRC may allow you to pay a tax bill in instalments through a payment plan, often called a Time to Pay arrangement. HMRC will usually look at what you owe, what you can afford, your income and spending, whether you have other tax debts and whether you contact them before the situation gets worse.
Who this guide is for
This guide is for individuals, sole traders and company directors who cannot pay a tax bill in full by the deadline.
It may apply to Self Assessment, VAT, PAYE, Corporation Tax or other HMRC debts, depending on the circumstances.
What is Time to Pay?
Time to Pay is HMRC's approach to allowing some taxpayers to pay tax debts over time.
Instead of paying the whole amount immediately, you agree regular instalments. HMRC will consider affordability and may ask about income, spending, assets, savings and other debts.
The goal is to agree a realistic plan that clears the debt.
When might HMRC agree a payment plan?
HMRC may consider a payment plan if you cannot pay in full but can pay over time.
They will usually expect you to be honest about your financial position and to keep up with future tax obligations.
If you have savings or assets, HMRC may expect you to use them to reduce the debt as much as possible.
What information might you need?
HMRC may ask for:
- the tax reference for the debt
- bank details for Direct Debit
- details of income and spending
- business cash flow information
- other taxes owed
- savings or assets
- what you can afford each month
For company tax debts, HMRC may ask about the company's income and spending.
Interest and penalties
A payment plan does not necessarily remove interest or penalties.
Interest may continue to run until the tax is paid. Penalties may also apply depending on the tax and deadline.
This is why it is usually better to contact HMRC early rather than wait for enforcement action.
What if you ignore the debt?
Ignoring a tax bill can make the position worse.
HMRC may issue reminders, charge interest and penalties, use debt collection processes or take further action.
If your business is struggling, early advice can help you understand options before the problem becomes more serious.
Common mistakes
A common mistake is waiting until HMRC starts chasing before asking for help.
Another mistake is agreeing to instalments that are not realistic. If you miss payments under the arrangement, HMRC may cancel it.
Some people also forget that future tax bills still need to be paid while old debt is being cleared.
What to do next
If you cannot pay HMRC on time:
- Do not ignore the bill.
- Check the tax, amount and deadline.
- Work out what you can realistically afford.
- Gather income and spending information.
- Contact HMRC or ask your accountant to help.
- Keep filing returns even if you cannot pay in full.
Common questions
Is a Time to Pay arrangement guaranteed?
No. HMRC decides based on the facts and affordability.
Will interest stop if I get a payment plan?
Not necessarily. Interest may continue until the tax is paid.
Should I still file my tax return if I cannot pay?
Yes. Filing late can create extra penalties. File the return and then deal with payment.
Can companies get payment plans?
In some cases, yes. HMRC may ask for company income, spending and cash flow details.
Related guidance
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