HMRC Time to Pay: How to Set Up a Payment Plan for Your Tax Bill
If you cannot pay your Self Assessment tax bill — or any other HMRC debt — in full by the due date, you do not have to do nothing. HMRC operates a Time to Pay (TTP) arrangement that allows you to spread payments over a series of instalments. Crucially, if you contact HMRC and agree a TTP arrangement before the deadline passes, HMRC will not charge the standard late payment surcharges — though interest continues to accrue.
What is Time to Pay?
A Time to Pay arrangement is a formal agreement between you and HMRC to pay an outstanding or upcoming tax debt in monthly instalments. It does not write off any of the debt — you will pay everything you owe, plus interest. But it prevents the additional surcharges that kick in if you simply miss a payment deadline without making any arrangement.
TTP can cover:
- Self Assessment income tax and Class 4 NICs.
- VAT (for businesses).
- PAYE (for employers).
- Corporation Tax (for companies).
- Other HMRC debts.
Who can set up an online TTP?
HMRC's online self-service TTP tool (available via your HMRC Personal Tax Account or Business Tax Account) is available if:
- Your Self Assessment debt is £30,000 or less.
- The debt is no more than 60 days overdue.
- You have no other existing TTP arrangements with HMRC.
- Your most recent Self Assessment return has been filed.
If you do not qualify for the online service, you must call HMRC's Payment Support Service on 0300 200 3835. For larger debts or more complex situations, HMRC may want a full income and expenditure assessment before agreeing terms.
Interest charged under a TTP arrangement
HMRC charges interest on deferred tax at the Bank of England base rate plus 2.5 percentage points. With the base rate at 4.5% in early 2026, the current late payment interest rate is approximately 7.0%. Interest is charged from the original due date, not from when the TTP is agreed, and continues to accrue until the debt is cleared.
This is substantially lower than credit card interest rates, making TTP one of the cheapest ways to finance a tax debt if cash flow is a problem.
Late payment penalties: what TTP prevents
Without a TTP arrangement, HMRC charges surcharges on unpaid Self Assessment tax:
| How overdue | Penalty |
|---|---|
| 30 days late | 5% of tax outstanding |
| 6 months late | Additional 5% of tax outstanding |
| 12 months late | Additional 5% of tax outstanding |
On a £10,000 bill, the surcharges alone can reach £1,500 over 12 months, on top of the interest. Agreeing a TTP before the 30-day deadline passes avoids the 5% surcharge entirely.
What HMRC needs for larger TTP requests
For debts above £30,000 or where you phone HMRC, be prepared to provide:
- Your total monthly income from all sources.
- Your total monthly outgoings (rent/mortgage, utilities, food, loan repayments).
- Details of any savings or assets that could be liquidated to pay the debt.
- How long you need to spread the payments.
HMRC will assess whether your proposed repayment plan is realistic and affordable. They typically prefer arrangements of 12 months or less, but longer periods can be agreed for genuine hardship cases.
What HMRC will not accept
HMRC does not have to agree to a TTP arrangement and will generally decline if:
- You have a history of defaulting on previous TTP arrangements.
- HMRC believes you are deliberately avoiding or evading tax.
- Your proposed repayment plan is not credible given your income and assets.
- You have assets that could reasonably be used to pay the debt in full (savings, property equity, etc.).
Tips for making a successful TTP application
- Contact HMRC before the deadline, not after. Calling on 29 January for a bill due 31 January is far better than calling on 1 February.
- Be realistic about affordability. Proposing unrealistically small monthly payments risks HMRC rejecting the arrangement or renegotiating.
- Keep paying while negotiating. If you can make partial payments in the meantime, do so — this demonstrates good faith and reduces the interest accruing.
- File your return first. HMRC will not agree a TTP if your return has not been filed. Late filing penalties are separate from late payment penalties.
Frequently asked questions
Does a TTP arrangement affect my credit score?
No. HMRC does not report tax debts or TTP arrangements to credit reference agencies. Your credit score is unaffected by having a TTP in place. However, if HMRC escalates to enforcement action (such as a County Court Judgment), that would appear on your credit record.
What happens if I miss a payment in my TTP arrangement?
HMRC can cancel the TTP arrangement if you miss a payment without explanation. You should contact HMRC immediately if you think you will miss a payment — they can often revise the arrangement rather than cancelling it entirely. Once cancelled, all late payment surcharges and interest that would have applied become due immediately.
Can a TTP arrangement cover Payments on Account?
Yes. If you are struggling to pay the first or second Payment on Account (due 31 January and 31 July respectively), you can contact HMRC to set up a TTP covering those amounts as well as any balancing payment from the previous year.