How does a Time to Pay arrangement work with HMRC?

Full answer

A Time to Pay (TTP) arrangement is an agreement with HMRC to pay a tax debt in instalments rather than as a lump sum. It is available for most HMRC debts including Self Assessment, VAT, PAYE/NI, and Corporation Tax. **Online self-service (Self Assessment)** If you owe £30,000 or less in Self Assessment and have filed your return, you can set up a TTP online via your HMRC online account without speaking to an adviser. Conditions: - The debt must be 60 days or less overdue - You must be up to date with all other HMRC obligations - You cannot have had a TTP arrangement in the last 12 months that failed **Telephone TTP for larger or other debts** Debts above £30,000, VAT debts, or PAYE arrears must be agreed by calling the HMRC Business Payment Support Service: 0300 200 3835. HMRC will ask about income, expenditure, and assets to assess what you can afford. **Interest charges (2026)** HMRC charges interest on all tax paid late, including during a TTP arrangement. The late payment interest rate is linked to the Bank of England base rate + 2.5%. As of June 2026 this is approximately 7.25% per annum (rate adjusted when the base rate changes). There is no additional surcharge while a TTP is in place. **Penalties** Agreeing a TTP does not remove penalties already issued, but it prevents new late payment penalties from accruing while the arrangement is in force. **Worked example** A self-employed plumber owes £6,000 in Self Assessment tax for 2024/25. They set up a 6-month online TTP starting June 2026: £1,000/month + accruing interest of roughly £218 over the period. Total cost approximately £6,218.

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