HMRC Time to Pay: How to Set Up a Self-Assessment Payment Plan (2026 Guide)

What Is HMRC Time to Pay?

Time to Pay (TTP) is HMRC's formal payment plan scheme. If you can't pay your Self-Assessment tax bill in full, HMRC may let you spread payments over 3 to 12 months (occasionally longer in exceptional cases).

What you need to know upfront:

• Not automatic: You must apply and demonstrate you genuinely can't pay now
• Interest still applies: Currently 7.75% per year on the outstanding balance
• Doesn't waive penalties: The £100 late filing penalty and 5% late payment penalties still apply
• Must keep up payments: Missing a payment can trigger immediate enforcement
• Free to set up: HMRC doesn't charge fees for TTP arrangements

Who Qualifies for Time to Pay?

HMRC considers TTP if:

• You owe less than £30,000 in Self-Assessment tax (higher amounts need manual review)
• You have a genuine inability to pay (temporary cash flow issue, unexpected expenses, business downturn)
• You're up to date with tax returns (if you haven't filed, do that first)
• You don't already have a TTP arrangement in place for a different tax
• You can afford realistic monthly payments (HMRC will check your income/expenses)

HMRC will likely reject your request if:

• You have a history of missed payments or broken TTP arrangements
• You haven't filed your tax return yet
• You're clearly able to pay but choosing not to
• You propose unrealistic payments (e.g., £5/month on a £10,000 debt)

How to Apply: Online vs Phone

Option 1: Online Self-Service (Debts Under £30,000)

If you owe less than £30,000 and filed your return within the last 60 days, you can set up a payment plan online without speaking to anyone.

Steps:

1. Log in to your Personal Tax Account at gov.uk
2. Go to "Self Assessment" → "Pay your Self Assessment tax bill"
3. Select "Set up a payment plan"
4. Enter the monthly payment amount you can afford
5. HMRC's system will show if it's accepted (usually instant)
6. Set up a Direct Debit for automatic monthly payments

Pros: Fast (often approved in minutes), no phone call, available 24/7

Cons: Only works for debts under £30k, rigid repayment terms, no negotiation

Option 2: Phone Application (Debts Over £30,000 or Complex Cases)

For larger debts, longer payment plans, or if the online system rejects you, call HMRC's Payment Support Service.

Contact Details:

• Phone: 0300 200 3835
• Hours: Monday-Friday, 8am-6pm
• Have ready: National Insurance number, Unique Taxpayer Reference (UTR), details of your income/expenses, bank details for Direct Debit

What HMRC will ask:

• Why you can't pay now (be specific — "cash flow issues" isn't enough)
• Your monthly income and essential expenses
• What monthly payment you can afford
• How quickly you can clear the debt (they prefer 12 months or less)
• Whether you've tried to borrow money or cut expenses

How Much Can You Afford? The Monthly Payment Calculation

HMRC wants to see you can genuinely afford the payments. They'll ask about your income and expenses, then expect you to pay what's left over.

Income they'll count:

• Salary/self-employed earnings (after tax)
• Benefits (Universal Credit, Child Benefit, etc.)
• Rental income
• Pension income

Expenses they'll accept:

• Rent/mortgage
• Council tax
• Utilities (gas, electric, water)
• Food and household essentials
• Transport (if essential for work)
• Childcare
• Insurance (home, car if needed for work)

Expenses they'll challenge:

• Gym memberships
• Streaming subscriptions
• Eating out
• Holidays
• Non-essential car payments

Example calculation:

Monthly income:        £3,000
Rent:                  -£1,000
Council tax:           -£150
Utilities:             -£200
Food:                  -£400
Transport:             -£200
Childcare:             -£300
Insurance:             -£100
                       -------
Disposable income:     £650

HMRC will expect: £400-500/month payment (leaving you a small buffer)
                

What Happens After Approval?

Once HMRC approves your Time to Pay request:

1. You'll get a reference number — write it down (you'll need it if you contact HMRC again)
2. Direct Debit is set up — payments are taken automatically on the agreed date each month
3. Interest continues to accrue — at 7.75% per year on the outstanding balance (charged daily)
4. Penalties aren't waived — the £100 filing penalty and 5% payment penalties (if applicable) are added to your balance
5. No further enforcement — as long as you keep up payments, HMRC won't send bailiffs or take legal action

Your obligations:

• Make every payment on time — missing one can break the arrangement
• File future returns on time — if you miss the next year's deadline, the TTP may be cancelled
• Pay future tax bills in full — TTP only covers the current debt
• Contact HMRC if circumstances change — if you can't make a payment, call them before the Direct Debit date

What If Your Payment Plan Request Is Rejected?

If HMRC rejects your Time to Pay request, you have options:

1. Call Back and Try Again

Different HMRC officers have different interpretations of the rules. If one rejects you, call back the next day and speak to someone else. Be prepared to explain your situation more clearly.

2. Offer a Larger Deposit

HMRC is more likely to approve if you pay something upfront. Even £200-500 as a deposit can make the difference.

3. Propose a Shorter Payment Period

If you asked for 12 months and were rejected, try 6 months with higher payments. HMRC prefers debts cleared quickly.

4. Show You've Cut Expenses

If HMRC thinks you can afford more, demonstrate you've cancelled subscriptions, cut back on luxuries, or taken on extra work. Bring evidence (bank statements, cancelled gym membership, etc.).

5. Borrow Money (If Possible)

HMRC will suggest borrowing from family or getting a bank loan. If you've tried and been rejected, mention this during the call. It strengthens your case.

6. Speak to a Supervisor

If you're getting nowhere with the officer, politely ask: "Can I speak to a supervisor or escalate this to the Debt Management team?" Sometimes senior staff have more flexibility.

7. Contact Your MP (Last Resort)

If HMRC is being unreasonable and you're facing genuine hardship, contact your local MP. They can't override HMRC, but they can push for a review. This works occasionally for extreme cases.

What If You Can't Keep Up Payments?

Life happens. If your circumstances change and you can't make a payment:

Option 1: Contact HMRC Before You Miss a Payment

• Call the Payment Support Service (0300 200 3835) at least 3 days before the Direct Debit date
• Explain why you can't pay (job loss, emergency expense, illness)
• Ask to renegotiate (lower payments, payment holiday, extended term)
• HMRC will often agree if you're proactive

Option 2: Miss a Payment and React

• HMRC may cancel your arrangement and demand full payment immediately
• If they cancel, you can't set up another online — you'll need to call and negotiate
• Enforcement action (bailiffs, court) becomes possible

Time to Pay vs Bankruptcy vs Debt Relief Order

If you genuinely can't afford any payment plan, you have nuclear options:

Reality check: HMRC would rather have you on a payment plan than bankrupt. Bankruptcy means they get nothing. Unless you're facing genuine financial collapse, push for Time to Pay.

How to Write a Time to Pay Request Letter

If you're applying by post (rare, but possible), here's a template:

[Your Name]
[Your Address]
[Your National Insurance Number]
[Your UTR]

HMRC Payment Support Service
BX9 1AS

[Date]

Dear Sir/Madam,

Request for Time to Pay Arrangement — Self-Assessment Tax Year 2024/25

I am writing to request a Time to Pay arrangement for my Self-Assessment tax bill of £[AMOUNT], which was due on 31 January 2026.

Reason for Request:
[Explain briefly why you can't pay — e.g., "I experienced a significant drop in income in Q4 2025 due to losing a major client" or "I had unexpected medical expenses in December that depleted my savings."]

Proposed Payment Plan:
I can afford to pay £[AMOUNT] per month over [X] months, starting from [DATE]. This would clear the balance by [END DATE].

Financial Situation:
- Monthly income: £[AMOUNT]
- Monthly expenses: £[AMOUNT]
- Disposable income: £[AMOUNT]

I have attached bank statements for the last 3 months to demonstrate my financial position.

I am committed to keeping up these payments and ensuring all future tax returns are filed and paid on time.

Please confirm if this arrangement is acceptable. I can be contacted on [PHONE] or [EMAIL].

Yours faithfully,
[Your Signature]
[Your Name]
                    

Real Example: How Long Does a Payment Plan Take?

Scenario: You owe £6,000 in Self-Assessment tax (due 31 January 2026). You can afford £500/month.

Payment plan: 12 months

Interest: 7.75% per year = £233 over 12 months

Total paid: £6,233 (£6,000 tax + £233 interest)

Key point: The interest adds £233, but that's much cheaper than:

• 5% late payment penalty (£300 at 30 days, another £300 at 6 months) = £600
• Daily penalties if you haven't filed (£10/day from 1 May = £900 max)
• Bailiff fees if HMRC escalates enforcement (£75-310)

Total cost without TTP: £1,800+ in penalties + interest

Total cost with TTP: £233 in interest

Savings: £1,567

Common Mistakes to Avoid

• Waiting too long to apply: The sooner you contact HMRC, the more flexible they are. Don't wait until bailiffs are at the door.
• Not filing your return first: HMRC won't discuss payment plans if you haven't submitted your return. File first, then call.
• Proposing unrealistic payments: £50/month on a £10,000 debt won't be accepted. Be realistic.
• Missing the first payment: Breaking the arrangement in Month 1 looks terrible and makes renegotiation harder.
• Not reading the letter carefully: If HMRC sends written confirmation, check the payment amounts, dates, and reference number. Mistakes happen.
• Assuming penalties are waived: They're not. The £100 filing penalty and 5% payment penalties are added to your balance.
• Not cancelling the Direct Debit yourself if needed: If you need to renegotiate, call HMRC first before cancelling the DD through your bank. Cancelling without telling them triggers enforcement.

Frequently Asked Questions

Can I get a Time to Pay arrangement if I'm self-employed?

Yes. HMRC doesn't discriminate based on employment status. Self-employed, employee, landlord, pensioner — all can apply.

Will a Time to Pay arrangement affect my credit score?

No, as long as you keep up payments. HMRC doesn't report TTP arrangements to credit agencies. If you default and HMRC takes legal action (County Court Judgement), that will appear on your credit file.

Can I pay off the balance early?

Yes. You can pay extra or pay the full balance at any time. Contact HMRC first to confirm the exact amount (including accrued interest) before making a lump sum payment.

What if I have other HMRC debts (VAT, PAYE, Corporation Tax)?

You can have separate Time to Pay arrangements for different taxes. However, HMRC prefers you consolidate if possible. If you owe multiple debts, mention this during the call.

Can I negotiate a payment holiday (skip a month)?

Rarely. HMRC expects consistent payments. If you have a genuine emergency (hospitalization, job loss), call and explain. They may allow you to skip one month and add it to the end.

What if my business is struggling and I can't afford any payment?

Be honest with HMRC. If you genuinely have no disposable income, they may agree to a nominal payment (£10-20/month) while you stabilize. This keeps enforcement at bay while you sort out your finances.

Can I apply for Time to Pay if I'm already on a payment plan for last year?

Technically yes, but HMRC will be less sympathetic. If you're repeatedly unable to pay on time, they'll question your financial management and may refuse. This is a red flag that you need professional help (accountant or debt advisor).

Key Takeaways

• Time to Pay is a lifeline, not a loophole. HMRC offers it because they want to get paid, not to be generous.
• Apply early. The closer you are to enforcement, the less flexible HMRC becomes.
• Be realistic about payments. Don't promise £600/month if you can only afford £400. Defaulting looks worse than asking for a longer term upfront.
• Keep up every payment. Missing one breaks the arrangement and triggers enforcement.
• Interest still accrues. You'll pay more overall, but it's cheaper than penalties and legal fees.
• File on time in future. If you break the TTP by missing next year's deadline, HMRC will be much less forgiving.