HMRC launched the Time to Pay arrangement scheme to help individuals and businesses if they’re having difficulties paying their tax bill on time.

A Time to Pay arrangement is essentially a payment plan between you and HMRC, allowing you to make affordable monthly payments towards your tax bill if you’re struggling to pay it on time.

If you’re unable to meet your tax payment deadline, or think that you may struggle to do so, contact HMRC as soon as possible. The idea of it can seem overwhelming but nobody wants to see you suffer, and if setting up an arrangement means there’s a greater chance of the tax being paid, HMRC are likely to be open to it.

Yes, HMRC will charge interest on the tax that you owe, even if you set up a Time to Pay arrangement. Interest will start to accrue from the original payment deadline until the end of the arrangement.

If it’s for your Self Assessment tax bill you might be able to set up a Time to Pay plan online but only if it’s less than 60 days after the payment deadline and you:

• Have submitted your tax return
• Owe £30,000 or less
• Don’t currently have any other outstanding debts or payment plans with HMRC

For everything else you’ll need to contact HMRC and speak to an adviser. They’ll ask for the reference number relating to the bill that you want to discuss and your (or your business’s) UTR number, so have these handy before the call.
 

The payment plan will be for the full amount that you owe, plus any interest, but the amount you pay for each instalment depends on what you or the business can realistically afford to pay.

Individuals who request a payment plan won’t normally pay more than 50% of their disposable income, and HMRC will carry out an ‘income and expenditure’ assessment to work this out.

You’ll need to provide your personal details and those of any dependants, as well as information about you and your households income and spending each month.

This depends on how much you owe, and what you or the business can reasonably afford to pay each month. These arrangements are intended to be flexible so the payment plan can be adapted if your circumstances change.

For instance, making larger payments over a shorter period of time if your income increases, making a lump sum payment, or asking for more time if your expenses increase or income reduces.

HMRC say that they won’t ask anyone to sell the family home in order to pay their tax bill though if you have other assets, such as a second home or savings, HMRC may discuss these with you. Your pension pot is also safe.

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