Answers · UK 2025/26

What is an HMRC Time to Pay arrangement and how does it work?

A Time to Pay arrangement lets you spread a Self Assessment, VAT, PAYE or Corporation Tax bill you cannot afford to pay in one go into manageable monthly instalments, agreed directly with HMRC. Self Assessment bills up to £30,000 can often be set up automatically online; larger or more complex debts require calling HMRC to negotiate a bespoke plan.

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A Time to Pay (TTP) arrangement is a formal payment plan agreed with HMRC that allows individuals and businesses to pay tax debts in instalments rather than as a single lump sum, helping avoid more serious enforcement action for those in genuine temporary financial difficulty. **Self Assessment: the online self-service option** If you owe Self Assessment tax of £30,000 or less, filed your return, and are within 60 days of the payment deadline, you can typically set up a Time to Pay plan yourself online through your Government Gateway account, choosing a monthly instalment amount and repayment period (usually up to 12 months) without needing to speak to anyone at HMRC. **Larger or more complex debts** For debts above £30,000, VAT, PAYE, or Corporation Tax arrears, or more complex circumstances, you need to call HMRC's Payment Support Service directly to negotiate a bespoke arrangement, which may involve providing details of your income, expenditure, assets, and why you cannot pay in full. **Interest still applies** Entering a Time to Pay arrangement does NOT stop interest accruing on the outstanding balance -- HMRC continues to charge late payment interest on the unpaid amount throughout the plan, though it does typically avoid the more serious late payment PENALTIES that would otherwise escalate the longer a debt goes unaddressed, provided you keep up with the agreed instalments. **Worked example** Tom owes £6,000 in Self Assessment tax he cannot pay by 31 January. He sets up an online Time to Pay plan for £500 a month over 12 months. He avoids the immediate late payment penalty escalation that would otherwise apply, but HMRC continues to charge interest (at the current late payment interest rate) on the reducing balance each month until it is fully repaid. **What happens if you miss a payment** Missing instalments can cause HMRC to cancel the arrangement and demand the full remaining balance immediately, potentially triggering debt collection action, so it is important to only agree to a monthly amount you can realistically sustain. **Why act proactively** Contacting HMRC BEFORE the payment deadline (or as soon as possible after) to request Time to Pay is treated far more favourably than waiting for HMRC to chase you -- proactively arranging a plan can avoid or reduce late payment penalties, whereas ignoring the debt tends to escalate enforcement action, including potential debt collection agencies or, in serious cases, County Court action.