An HMRC Time to Pay arrangement is a payment plan that lets you clear a tax bill in monthly instalments instead of in one go. You may be able to set one up yourself online if you owe Self Assessment tax, employers' PAYE or VAT, or otherwise by phone, and HMRC will ask about your income, spending and any savings or assets before agreeing an amount. Interest keeps running on the outstanding balance throughout, currently at 7.75% from 9 January 2026, so the sooner the debt is paid, the less interest you pay. You do not have to wait for the bill to be overdue; contact can come as soon as you know you will struggle to pay.
What is HMRC Time to Pay?
Time to Pay is HMRC's name for a payment plan on a tax bill you cannot pay in full. It is set out on GOV.UK's If you cannot pay your tax bill on time guidance. Rather than paying the full amount by the due date, you agree to pay it off in monthly instalments. HMRC checks whether the plan is affordable for you based on what you earn and what you spend. If you cannot agree a plan, HMRC will ask you to pay the amount you owe in full.
This is not automatic and it is not a write-off. You still owe the tax, and interest continues to accrue on the unpaid balance until it is cleared.
Can I set up a payment plan myself?
Yes, if the online service confirms you are eligible, you can use HMRC's online payment plan service to check eligibility and set up instalments without speaking to anyone. To use it you need the reference number for the tax you cannot pay (usually your Unique Taxpayer Reference from a letter HMRC has sent you), a UK bank account you are authorised to set up a Direct Debit from, and details of your income and spending.
HMRC can also consider a plan before the deadline, where it is satisfied you will not be able to pay in full. Separately, if your payments are up to date and you simply want to put money aside toward your next Self Assessment bill in advance, a Budget Payment Plan is a separate, different route worth knowing about.
If you cannot set up a plan online, for example because the online tool does not cover your tax or your situation, you contact HMRC directly and talk it through.
What does HMRC ask about?
HMRC wants a realistic picture of what you can afford, not just what you would like to pay. The table below sets out what it asks for and why.
| What HMRC asks for | Why |
|---|---|
| Whether you can pay in full | HMRC's starting position is full payment; instalments are the fallback |
| How much you earn each month | Sets the ceiling for what a plan could realistically include |
| How much you usually spend each month, including rent, food, utilities and fixed outgoings such as subscriptions | Determines what is left over to put toward the debt |
| What savings or investments you have | HMRC expects you to use savings or assets to reduce the debt first, where you have them |
| Whether you have other taxes you need to pay | A new bill can sometimes be folded into the same plan |
As a broad guide, HMRC's own guidance says you will usually be asked to pay around half of what is left over each month after your fixed outgoings, though this depends entirely on your figures. You can offer to pay more than that if you want to clear the debt faster and pay less interest overall.
What if I have used independent debt advice already?
If you have already been through independent debt advice, for example from Citizens Advice, and have a Standard Financial Statement, HMRC will accept this as evidence of your income and outgoings rather than asking you to go through the exercise again.
How long does a payment plan last, and what if my circumstances change?
There is no fixed time limit on a Time to Pay arrangement. How long it runs for depends on how much you owe and what you can realistically afford each month. If anything changes, for better or worse, you should contact HMRC: a plan can be made longer or shorter, and if HMRC becomes aware your circumstances have improved it may get in touch to discuss revising your repayments.
If you miss a payment, HMRC will contact you to find out why and, where possible, will try to rearrange the plan with you rather than cancel it outright. If you cannot pay a further tax bill while a plan is running, contact HMRC: it may be possible to fold the new bill into the existing arrangement.
What happens if I do not contact HMRC at all?
HMRC will always try to make contact if you miss a tax payment, including by letter, text, and sometimes a visit to your home or workplace. If you do not respond, or you cannot agree a plan, HMRC's enforcement options include instructing a debt collection agency, taking payments directly from your wages or pension, taking or selling belongings you own and taking money directly from a bank or building society account (both only if you live in England, Wales or Northern Ireland), court action, bankruptcy proceedings, or, for a business tax debt, action to close down the company. Any costs involved, such as auction fees, are normally added to what you owe. HMRC says it will explain your rights, costs and options before taking any of these steps.
Worked example
Example. Consider a self-employed decorator who owes £4,800 in Self Assessment tax after a slower year for work, with the balancing payment due on 31 January. He knows he cannot pay it in full by the deadline. In week one he logs into his HMRC online account and checks whether he is eligible to set up a plan through the online service, using his Unique Taxpayer Reference from his statement of account.
The online tool asks for his monthly income and his fixed outgoings, rent, van costs, utilities, so it can work out what is realistically left over. He has no significant savings to draw on first. Based on his figures, he is offered a plan spread over several months by Direct Debit. He knows interest will keep accruing on the outstanding balance at HMRC's current rate until it is cleared, so he chooses to pay slightly more than the minimum offered each month to bring the total interest down. He also flags that he has a VAT bill due later in the year, so that if he cannot pay it in full he knows to contact HMRC promptly rather than let it become a separate, unmanaged debt.
What to do in week one
You do not have to wait until the deadline has passed. If you already know you cannot pay, you can contact HMRC now.
Working out the numbers and making first contact is something you can do yourself. Where it helps to have an adviser is when the debt spans more than one tax, when a company is involved and directors are being asked to put in personal funds, or when the amount HMRC is asking for does not match your own understanding of what you owe. If the wider issue is one of ongoing tax planning rather than a single overdue bill, that is worth a separate conversation once the immediate payment position is settled. If HMRC has also opened a formal check alongside the payment issue, our tax investigations page covers how that process works.
Frequently Asked Questions
No. Interest continues to accrue on the outstanding balance for as long as tax remains unpaid, currently at a late payment rate of 7.75% from 9 January 2026. Paying the debt off faster reduces the total interest you pay.
No. HMRC checks whether a plan is affordable based on your income, spending, savings and assets. If it decides you can pay in full, or that your proposal is not realistic, it will ask you to pay the amount owed in full instead.
Possibly. HMRC can consider a request before the payment deadline, where it is satisfied you will not be able to pay in full. A Budget Payment Plan is something different again: a voluntary way to build up credit toward a future Self Assessment bill while your payments are up to date, rather than a plan for a bill you cannot meet.
HMRC will ask how the company plans to pay as quickly as possible and will expect the company to reduce the debt first by releasing assets such as stock, vehicles or shares where it can. It may also ask directors about putting in personal funds, accepting lending, or extending credit.
HMRC will contact you to find out why, and where possible will try to rearrange or renegotiate the plan rather than cancel it. Contact HMRC as soon as you know there is a problem, so the plan can be changed rather than ended.
Talk to us before you call HMRC
If you know a tax bill is coming that you will not be able to pay in full, speak to us before you contact HMRC. We can talk through your income and outgoings, which payment route may fit, and whether what you propose to HMRC is realistic and affordable. Call us on 020 8554 2135 or email info@visionconsulting.co.uk, or get in touch via our contact page, and a senior manager will take your enquiry personally.
By the Vision Consulting team.
This is general information, not advice. Your position depends on your circumstances. Speak to us before acting.