A debt to HMRC can exist for a variety of reasons and the best payment solution is different for each person and business.
HMRC takes its responsibility to ensure that people and businesses who can pay do so on time. We provide additional tailored support for people facing financial difficulties or personal problems.
If you're having trouble paying your taxes, ask us about affordable monthly payment options, called a time payment agreement. We will always try to work with you to arrange a time to pay what you owe based on your income and expenses.
Repayment period agreements are based on the debtor's particular financial situation, so there is no "standard" repayment period. We look at how much you can pay and then use that to calculate how long you have to pay.
A repayment agreement can cover all outstanding amounts, including penalties and interest. CheckHMRC interest for late and early payments.
The arrangement is intended to be flexible and not a permanent, formal contract. It can change over time, so it can be shortened if your earnings increase or if you receive an unexpected cash reward (eg an inheritance). It can also be extended if necessary expenses increase or income decreases.
More than 90% of our payment time agreements are successful.
This is how we determine debt repayment
We assess your ability to pay using the "income and expenditure statement" form. It analyzes your income, disposable assets and expenses to help us calculate your disposable income. See the "How we determine how much you can pay" section for more information.
HMRC will not normally expect you to pay more than 50% of your disposable income. It can be higher if you have a very high disposable income. There is no upper limit to how long someone can pay.
Business finances are often complex, so we ask you to tell us how much you think the business can pay.
After reviewing your proposal, we'll ask you questions to make sure it's affordable and we'll pay off your debt as quickly as possible.
The length of the event will depend on:
- how much your company owes
- the company's financial condition
The layout will be reviewed regularly and may be adjusted over time.
If you can't pay your taxes and need help, you should do itcontact HMRCas quickly as possible.
For self-assessment accounts, you may be able to do thisset up an online payment plan. This allows you to spread your self-employment tax bill in installments without contacting HMRC.
You can set up a payment plan to spread the cost of your latest self assessment bill online without calling us if:
- you owe £30,000 or less
- you have no other payment plans or debts with HMRC
- Your tax returns have been updated
- is less than 60 days after the due date
What to expect during the interview
When you call us, we'll ask you a few questions, so be sure to provide the following information when you call us.
We can ask you:
- the reference number of the account you wish to discuss
- details of the amount of tax you are unable to pay, including any outstanding debt owed to HMRC
- why you are unable to pay and what your current financial situation is - described in the section "How we determine how much you can pay"
- what you did to pay the bill on time and in full
- about your current financial situation (including income and expenses, savings, investments and other assets)
- how you expect your finances to change in the future
- questions to see if a fixed-term payment contract would be the best payment solution
- for your bank account details so you can set up a direct debit for your contract
We can ask you:
- for the account number you wish to discuss
- about any other debt owed by the company to HMRC
- on all tax refunds due to the company
- to obtain information about the company's financial position - including expected changes in the company's finances in the future
- what efforts have been made to raise funds to cover the company's debts
- which was done to try to pay the tax bill
- what the company has done or is doing to get its tax affairs back on track and enable repayment
- company bank account details so you can set up a direct debit (the caller must have permission to set up a direct debit on that account)
This is how we determine how much you can pay
We will use an "income and expenditure assessment form" to record details of how much money you receive and spend. We will ask you to:
- o your personal information (including your marital status and whether you have dependent family members)
- to obtain information about your employment (including your VAT registration number, if you are VAT registered and your employer's numberTO PAYcall the number if you are employed)
- if you own or rent a home and the price of your mortgage or rent
- for details of your average monthly household income (including any rental income and any benefits you receive)
- for details of your assets (such as the value of all your assets, whether you own motor vehicles and how much and when you paid for them)
- to obtain information about savings and investments (including savings certificates, premium bonds, individual savings accounts and stocks and shares)
- how much you spend each month on household bills (including gas, electricity, water and council tax) and transport to work, petrol, food, clothes and any TV packages you may have
- for details of any other debt you have (including loans, hire purchase and credit cards)
- to get information about creditors you may owe money to (including what you owe them and payments you make)
- how you plan to pay your tax debt
If you have discussed what you can afford with an impartial debt adviser (such as Citizens Advice), we will accept income and expenditure figures if they appear in their standard accounts. You must send the completed statement to the HMRC address in the last letter we sent you about your debt. Make sure the statement includes:
- social Security number
- Individual call to the taxpayer's number (if you have one)
Based on the information you provide, we calculate your monthly disposable income. This is your monthly surplus income after subtracting your monthly expenses.
We typically expect 50% of your disposable income to be deposited into your Time to Pay account. We expect you to pay 50% instead of 100% because we want:
- make your agreement permanent
- so they can handle any unexpected changes in costs
You may want to pay more than 50% to reduce the amount of interest you pay.
If you have a high disposable income but still need more time to pay back, we will work with you to negotiate a payment level that balances paying off your debt quickly with your reasonable monthly costs. This could mean paying more than 50% of your disposable income.
If your income and expense information shows that you do not have enough disposable income, we will stop our collection activities until your situation changes.
The length of the contract depends on how much you owe. There is no upper limit to the length of the event.
Your payment time will be based on the information you have shared with us. We make sure your monthly payment reflects what you can afford so it stays stable over the course of your contract. To help us help you:
- be open and honest when discussing your payment plan
- be prepared to explain unusual or large expenditure items
- provide all the information we ask for
We usually accept what you tell us without asking for more details, but we may need more details or evidence if your debt is large or complex.
We will confirm the information you gave us in the telephone conversation.
We may ask questions about your proposal to ensure that:
- it is available
- pay the debt as soon as possible
The length of the contract will depend on how much your company owes and its financial situation. It will be reviewed regularly and may be adjusted over time.
The schedule can be:
- shortened if the company's financial situation improves
- extended if the company's financial situation worsens but continues to improve
This is how the property is handled when we agree a payment date
If you have the means to pay HMRC liabilities by redeeming assets (for example, savings, shares or another home), we will discuss this with you.
If you have assets that both you and HMRC agree are realizable (including property interests), we expect you to do this to reduce the debt as much as possible before we settle.
We will not ask you to sell your family home. We may consider charging your home to secure a debt owed to HMRC if:
- it is not possible to agree a payment date with you
- you cannot pay in any other way
We don't expect you to use retirement funds early to pay off your debt. If you receive a pension, this will be taken into account as part of your income and expenses.
If your business can pay its HMRC obligations by releasing assets, we will discuss this with you. Funds may include:
- vehicles or shares
- managers invest personal resources in the company
- business loan
- extension of credit lines
If we agree with you that there are assets that your business can release (including an equity stake in commercial property), we expect that these will be used to reduce the debt as much as possible before we agree a repayment date.
Debt that can be included in a payment term agreement
Any taxes, fees, fines or additional charges that you cannot pay may be included.
Interest is charged as part of a payment timing agreement
Interest is calculated from the due date to the end of the repayment period.
Due interest will be included in the total debt covered by the scheme.
For information on interest on tax debt and fees, seeHMRC interest for late and early payments.
After agreement on payment date
If the installments are paid on time
No further action is required and future payment requests will be considered.
If you have changed circumstances
you shouldcontact usif your situation is:
- improves and you can pay your bill faster to increase your monthly payment
- it gets worse to see how we can lower your monthly payments
If you cancel your direct debit or if your payment fails
If you cancel monthly payments or payments fail, we will contact you. We will ask why the monthly installment was not paid. We may reinstate or renegotiate the payment agreement if necessary.
If we can't contact you or can't negotiate the amount you need to pay, we can choose to use oursauthority to collect tax claimscollect what you owe. We only use these permissions as a last resort.
If you have a new debt to HMRC
We expect full and timely repayment of the new debt. you ought tocontact usas quickly as possibleif you can't pay your tax bill in full.
If you are already making monthly payments under a term agreement, you can change this to account for this new debt. Before we can do that, we need to talk to you about the following:
- a property
Published on January 20, 2020
Last updated on November 4, 2021+show all updates
Added Welsh translation.
The guidelines have been updated so that they cover both companies and individuals.
Updated how to contact HMRC to discuss payment timing, added when an online payment plan can be set up.
Published for the first time.