HMRC payment plan

Can't pay your tax bill? Contact HMRC before they contact you

If you can't pay a tax bill in full, GOV.UK says you may be able to set up a payment plan to pay it off in monthly instalments. Answer a couple of questions to see which route fits your situation.

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Can I set up a payment plan with HMRC?

Usually yes. GOV.UK says you may be able to set up a payment plan to pay an overdue tax bill in monthly instalments. For many Self Assessment, Corporation Tax, VAT and PAYE debts, you can check eligibility and set one up online; for others, you contact HMRC directly. The sooner you get in touch, the better placed you are.

Which payment plan fits your situation?

Answer a couple of questions about the bill you can't pay.

Question 1

Is the bill already overdue?

Read the whole checklist as text

  • Is the bill already overdue?

    • No, not yet due: next, "Is it a Self Assessment bill?"
    • Yes, it's overdue: next, "Can you pay it in full right now?"

  • Is it a Self Assessment bill?

    • Yes: Set up a Budget Payment Plan
    • No: Plan ahead, and pay what you can early

  • Can you pay it in full right now?

    • Yes: Pay now to stop interest running
    • No: next, "Is this a personal bill, or a company or employer bill?"

  • Is this a personal bill, or a company or employer bill?

    • Personal (Self Assessment): Set up an online payment plan
    • Company or employer (Corporation Tax, VAT, PAYE): Contact HMRC about your company's tax debt

Interest estimator

Roughly how much interest would you pay?

An estimate for paying off your bill in equal monthly instalments, at the current late payment interest rate of 7.75% a year.

Total interest

£113

Average monthly payment

£852

Total to repay

£5,113

HMRC calculates the exact figure on your actual balance day by day. The rate can change if the Bank of England base rate changes, and any late filing or late payment penalties are separate from this interest estimate.

Get in early

Talk to HMRC early

Interest runs on a tax bill whether or not you've agreed a plan, and penalties can still apply if a payment is late. What a plan agreed early does change is your own position: you've told HMRC what's happening, set out what you can pay, and have something in place, rather than waiting for a letter and reacting to it. If you know now that you won't be able to pay in full by the deadline, get in touch before it, not after.

What HMRC asks

What HMRC will ask you

To set up a payment plan you'll need the relevant reference number for the tax you cannot pay, such as your Unique Taxpayer Reference, your UK bank account details (you must be authorised to set up a Direct Debit on the account), and details of your income and spending, or your company's income and spending if it's a company debt.

If you can't set up a plan online, HMRC will ask you directly: whether you can pay in full, how much you can repay each month, whether you have other taxes to pay, how much you earn, how much you usually spend each month, and what savings or investments you have. If you have savings or assets, HMRC will expect you to use these to reduce your debt as much as possible first. A Standard Financial Statement from independent debt advice, such as Citizens Advice, is accepted as evidence of your circumstances.

Monthly payments

How much you'll pay each month

HMRC works out a monthly amount based on how much you have left after you pay rent, food and utility bills, and fixed outgoings such as subscriptions. You'll usually be asked to pay around half of what you have left over each month towards the tax you owe. You can choose to pay more than that if you want to reduce the interest that builds up.

Interest and penalties

Interest and penalties

HMRC's late payment interest rate is 7.75% a year, in effect from 9 January 2026. It's set at the Bank of England base rate plus 4 percentage points, a margin that has applied since 6 April 2025, so the rate moves if the base rate does.

Self Assessment late payment penalties are separate from interest: 5% of the unpaid tax at 30 days, a further 5% at 6 months, and a further 5% at 12 months. See our Self Assessment dates guide for when your return and payment are due.

Tax code option

Pay through your tax code

You may be able to have a Self Assessment bill collected through your tax code instead of a separate payment, but only if all of these apply: you owe less than £3,000, you already pay tax through PAYE, and you submitted your paper return by 31 October or your online return by 30 December. If you qualify, HMRC collects it in equal instalments over 12 months, alongside your normal PAYE tax.

Company debts

If your company can't pay

If your company is in tax debt, HMRC will ask you how you'll pay your tax bill as quickly as possible. Have the company's income and spending ready, and expect HMRC to ask about savings or assets the company could use first. See our CT600 guide for how Corporation Tax figures are prepared.

Next time

Plan so it doesn't happen again

The easiest way to avoid a payment plan is knowing your bill early enough to set money aside for it, month by month, rather than finding out what you owe right before it's due. Finn estimates roughly what you'll owe from your own books as the year goes on, so the figure isn't a surprise when the deadline arrives.

Where Finn helps

Finn keeps you ahead of the bill, not behind it

Finn doesn't set up payment plans or talk to HMRC on your behalf. It keeps your books current so you can see the bill coming, months before it's due.

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  • Keeps the books current so you know the tax bill months ahead, not in January
  • Tracks Corporation Tax, VAT and Self Assessment dates
  • Works out roughly what you'll owe from your own numbers
  • Forecasts your cash flow from your own books, so a big bill is no surprise

Questions

HMRC payment plans, answered

What is an HMRC payment plan?

If you can't pay a tax bill in full, GOV.UK says you may be able to set up a payment plan to pay it off in monthly instalments. This is often called a Time to Pay arrangement. You use HMRC's online service to check if you're eligible and set one up, or contact HMRC directly if you can't set one up online.

What is a Time to Pay arrangement?

It's the general term for an agreement with HMRC to pay tax you owe over time, in instalments, rather than all at once. GOV.UK's online service is the main route to set one up for eligible debts.

I can't pay my Self Assessment bill. What do I do?

Pay what you can now to reduce interest, then check whether you can set up an online payment plan for a Self Assessment bill, or a Budget Payment Plan if you want to get ahead of your next bill. If you can't set one up online, contact HMRC.

I can't pay my Corporation Tax bill. What do I do?

Contact HMRC as early as you can. For a company or employer bill, such as Corporation Tax, VAT or PAYE, the same online service covers some debts if you're eligible; otherwise you contact HMRC directly. HMRC will ask how the company will pay its bill as quickly as possible and will expect you to use savings or assets to reduce the debt first.

How do I set up an HMRC payment plan for Self Assessment?

Use HMRC's online service to check eligibility and set up a monthly payment plan by Direct Debit. You'll need your Unique Taxpayer Reference or other relevant reference number, your UK bank account details (you must be authorised to set up a Direct Debit), and details of your income and spending.

I've had a letter from HMRC about a payment. What does it mean?

A letter chasing an overdue bill usually means HMRC wants to hear from you before they take further steps. Contacting HMRC yourself, before they chase you, generally puts you in a better position: it shows you're dealing with it and lets you set out what you can pay and when.

How much interest does HMRC charge on late payments?

HMRC's late payment interest rate is 7.75% a year, in effect from 9 January 2026. It's set at the Bank of England base rate plus 4 percentage points, from 6 April 2025, so it moves if the base rate moves.

What penalties apply if I pay Self Assessment tax late?

Self Assessment late payment penalties are 5% of the unpaid tax at 30 days, a further 5% at 6 months, and a further 5% at 12 months. These are separate from, and on top of, the interest charged on the outstanding balance.

Can I pay a Self Assessment bill through my tax code instead?

Only if all of these apply: you owe less than £3,000, you already pay tax through PAYE, and you submitted your paper return by 31 October or your online return by 30 December. If so, HMRC can collect what you owe through your tax code in equal instalments over 12 months.

Sources, checked on

General guidance, not advice for your situation. Rules change: always check the GOV.UK page before you act.

Know your tax bill before it's due, not after

Finn keeps your books current all year, so you can see what you'll owe with time to plan for it.

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