If you’ve got a tax bill that’s bigger than your bank balance, don’t panic. You’re not the only one in this boat. Loads of business owners hit a point where they can’t pay HMRC in one go. The good news is, HMRC knows this happens and offers a way to spread the cost. It’s called a Time to Pay arrangement, and it can really take the pressure off.
In this guide, we’ll walk through how to set one up, who qualifies, what HMRC will ask for, and how to stay on track. No jargon. No fluff. Just the steps you need to feel more in control.
What is a Time to Pay arrangement?
A Time to Pay arrangement is a formal payment plan with HMRC. It lets you pay your tax bill in smaller chunks, over several months, instead of all at once. Most plans last up to 12 months, but longer terms can sometimes be agreed, depending on your situation.
You still need to pay interest, but it’s much better than racking up penalties or getting chased by debt collectors. The key is to act early and stick to the plan once it’s in place.
Who can apply for a Time to Pay plan?
HMRC offers Time to Pay to most people and businesses who owe tax and are struggling to pay. That includes:
Sole traders
Limited companies
Partnerships
Anyone who files a Self Assessment
You can use it for different types of tax too, like:
Income Tax (Self Assessment)
VAT
PAYE
Corporation Tax
It’s important to note that Time to Pay is not automatic. You have to ask for it, and HMRC will want to know you’re genuinely unable to pay right now, but will be able to over time.
When should you contact HMRC?
The earlier, the better. Ideally, speak to HMRC before your payment is due. If the deadline has already passed, you can still ask, but the sooner you do it, the more likely they are to help.
Waiting too long could mean extra penalties, interest, or even enforcement action. Don’t bury your head in the sand. The moment you realise you might not be able to pay, get in touch.
How to set up a Time to Pay arrangement
There are two main ways to arrange a payment plan, depending on your situation:
1. Use HMRC’s online service (Self Assessment only)
If you’re an individual who owes less than £30,000 in Self Assessment tax, you may be able to set up a payment plan online without speaking to anyone.
You’ll need:
A Government Gateway account
Your most recent tax return filed
A debit card or bank details to set up monthly payments
Check eligibility and set it up here: gov.uk/difficulties-paying-hmrc
2. Call HMRC directly
For larger tax bills, company taxes, or more complex cases, you’ll need to call the Payment Support Service.
Phone: 0300 200 3822
Opening hours: Monday to Friday, 8am to 6pm
Have these ready:
Your Unique Taxpayer Reference (UTR) or VAT number
How much you owe
What you can afford to pay each month
Basic details about your income and spending
They might also ask for a short-term cash flow forecast, especially for businesses.
What happens after you agree?
Once HMRC agrees to the plan, they’ll send you confirmation. This will include:
The total amount you owe
The monthly payment amount
Your payment due dates
As long as you pay on time each month, the plan stays in place. If you miss a payment, the agreement can be cancelled, and HMRC could charge penalties or take further action.
Top tip: Set up a Direct Debit if you can. It’s one less thing to think about each month.
Can an accountant help you stay on track?
Absolutely. If all this feels overwhelming or if you’re not sure what you can afford, speaking to an accountant is a smart move. They can:
Help you understand exactly how much you owe
Talk through your monthly cash flow and affordability
Prepare the figures HMRC might ask for
Contact HMRC on your behalf, if needed
They’ll also check that your returns are accurate and make sure you’re not paying more tax than you need to. If your cash flow is tight, they can help you build a proper plan to get back on track.
Yes, it’s an extra cost, but it can save you time, stress, and sometimes even money. Think of it as an investment in peace of mind.
Don’t ignore a tax bill
A Time to Pay arrangement is not a free pass, but it can be a real lifeline when money’s tight. HMRC wants to collect the tax you owe, not put you out of business. If you’re honest and upfront, they’ll usually work with you.
So don’t ignore a bill you can’t afford. Reach out to HMRC or your accountant, get a plan in place, and give yourself some breathing room to move forward.
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