How does an HMRC Time to Pay arrangement work?

Full answer

A Time to Pay arrangement allows taxpayers who cannot pay a tax bill in full by the due date to spread payments over a period -- usually 12-36 months -- by agreement with HMRC. TTP covers Self Assessment income tax, National Insurance, Corporation Tax, VAT, PAYE, and some other liabilities. Interest and charges HMRC charges interest on any tax that remains unpaid after the due date: -- Late payment interest rate: Bank of England base rate + 2.5% = approximately 7.25% in 2026 (based on a 4.75% base rate) -- Interest accrues from the due date until payment is made -- If a TTP is agreed before the payment due date and payments are made on schedule, HMRC will not add the 5% late payment surcharge (which would otherwise apply for amounts unpaid after 30 days) How to set up a TTP Self Assessment debts below GBP 30,000: -- Set up online via your Government Gateway account at gov.uk ('Set up a payment plan') -- Available if you have filed your tax return and have no other TTP arrangements or HMRC debts -- Can pay over 12 months maximum online Larger amounts or other taxes: -- Call HMRC Business Payment Support Service: 0300 200 3835 -- Have available: UTR/VAT/PAYE reference, amount owed, income and expenditure summary -- HMRC will discuss how much you can afford and agree a realistic payment schedule What HMRC needs to agree TTP HMRC will typically ask for evidence of ability to pay. They expect you to: -- Have tried to pay in full from all available resources (savings, credit, assets) -- Be paying the instalments by direct debit where possible -- Contact HMRC proactively before the due date if possible Duration and renegotiation Typical TTP durations are 12-36 months. Arrangements can be renegotiated if circumstances change. Missing payments without contact with HMRC cancels the arrangement and enforcement action may follow. If HMRC refuses TTP HMRC can refuse TTP if the taxpayer is not being cooperative, has a history of late payment, or the proposed plan is not credible. In that case, enforcement options including collection through the courts, direct debit mandate enforced by HMRC (used for smaller debts), or distraint (seizure of assets) may be used.

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