Posted July 22, 2025

Can’t Pay Your Tax Bill? These Options are Available From HMRC

Finding yourself unable to pay your tax bill can be incredibly stressful, but you’re not alone. Many individuals and businesses face cash flow issues that make it difficult to pay their tax on time. The good news is that HMRC recognises these situations and offers several options to help taxpayers.

The key is to act quickly and communicate with HMRC before the payment deadline passes! Ignoring the problem will only make it worse, potentially incurring penalties, interest charges, and enforcement action. Here’s what you need to know about the options available.

Time to Pay Arrangements (TTP)

The most common solution for taxpayers struggling to pay their tax bill is a Time to Pay arrangement. This is essentially an agreement with HMRC that allows you to spread your tax payments over an extended period, making them more manageable.

Who can apply: Individuals and businesses can request a TTP arrangement for most types of tax, including Income Tax, Corporation Tax, VAT, and PAYE.

How it works: You’ll need to propose a realistic payment plan that demonstrates how you’ll clear your debt, HMRC will likely ask you to provide details of your incomings and outgoings to HMRC. HMRC will consider factors such as your financial circumstances, payment history, and the amount owed.  Each arrangement is unique to the taxpayer and is flexible so can be amended overtime if your circumstances change.

Setting up a TTP: For smaller debts (typically under £30,000), you may be able to set up a payment plan online through your HMRC online account. For larger amounts or more complex situations, you’ll need to call HMRC’s payment support service.

Online Payment Plans

HMRC has made it easier to set up payment arrangements through their online services. If you have an outstanding Self-Assessment tax bill of £30,000 or less, you can often arrange a payment plan online without speaking to anyone.

The online system will calculate what you can afford based on the information you provide and offer you suitable payment options. This is typically the fastest way to get a payment arrangement in place, and you’ll receive immediate confirmation.

Business Payment Support Service

Businesses facing difficulties have access to HMRC’s dedicated Business Payment Support Service. This service is designed to help companies navigate financial difficulties while maintaining their tax compliance, or you can check online: If you cannot pay your tax bill on time: Overview – GOV.UK

The support team can discuss various options including payment deferrals, reduced payment arrangements, and in some cases, write-offs for businesses in severe financial distress. They understand that business cash flow can be unpredictable and will work with you to find a realistic solution.

What Information You’ll Need

Before contacting HMRC, gather the following information to speed up the process:

• Details of all outstanding tax liabilities
• Your financial situation, including income, expenses, and assets
• Bank statements and cash flow forecasts
• Any relevant business information if you’re a company

Being prepared with this information demonstrates that you’re taking the situation seriously and helps HMRC assess what payment arrangement might be suitable.

Interest and Penalties

It is important to understand that interest will typically continue to accrue on any unpaid tax, even with a payment arrangement in place. However, HMRC may reduce or cancel penalties if you have a reasonable excuse for not paying on time and you’ve proactively contacted them to arrange payment.

The earlier you contact HMRC, the more likely they are to view your situation favourably and potentially reduce penalty charges.

When HMRC Might Refuse

While HMRC is generally understanding of genuine financial difficulties, they may refuse a payment arrangement if:

• You have a history of not keeping to previous agreements
• You haven’t provided sufficient information about your financial situation
• The proposed payment plan is unrealistic
• You haven’t paid other taxes that have become due since requesting the arrangement

Getting Professional Help

Dealing with tax payment difficulties can be complex, especially for businesses with multiple tax obligations. Professional accountants and tax advisors can help you navigate the process, negotiate with HMRC on your behalf, and ensure you’re taking advantage of all available options.

They can also help you put systems in place to avoid similar problems in the future, such as better cash flow management and tax planning strategies.

Don’t Delay – Take Action Now!

The most important thing to remember is that HMRC’s enforcement powers are significant, and they can take action to recover debts through various means including direct recovery from bank accounts, asset seizure, and legal proceedings.

Most taxpayers who proactively engage with HMRC find them reasonable and willing to work towards a solution.

Temporary financial difficulties don’t have to become long-term tax problems, with the right approach and professional support where needed, you can navigate through challenging times while maintaining your tax compliance.

If you’re facing tax payment difficulties, don’t hesitate to contact our experienced team. We can help you understand your options, communicate with HMRC on your behalf, and develop strategies to manage your tax obligations effectively.