HMRC Time to Pay: the plain English guide

Who qualifies for a Time to Pay arrangement

There is no fixed eligibility list. HMRC agrees a plan when three things are true: you genuinely cannot pay in full right now, you can realistically clear the debt over a reasonable period, and your tax filings are up to date. It covers Self Assessment, VAT, PAYE and Corporation Tax, and each plan is negotiated on your actual income and spending rather than a standard formula.

Two things help your case more than anything else. File any outstanding returns before you make contact, because HMRC will not agree a plan against unknown numbers. And treat the amount you offer as a promise, not an opening bid: a plan you keep protects you from penalties and enforcement, a plan you break puts you in a worse position than before.

The online self-serve route for Self Assessment

You can set up a Self Assessment payment plan entirely online through your Government Gateway account, with no phone call, if all of these apply:

• You owe £30,000 or less
• It is within 60 days of the payment deadline
• Your tax returns are up to date
• You have no other payment plans or debts with HMRC

You choose how much to pay upfront and spread the rest over monthly Direct Debits, up to 12 months. Because there is no negotiation, this is usually the fastest and least stressful route if you fit the criteria. Similar self-serve routes exist for employers' PAYE and VAT with their own limits; check gov.uk for the current thresholds on those.

What HMRC asks on the call

If you owe more than £30,000, need longer than 12 months, or the debt is another tax, you phone HMRC (the Self Assessment Payment Helpline, or the Payment Support Service for other taxes). The adviser will ask:

• Why you cannot pay in full, and what has changed
• What you have done to raise the money, including savings, assets and normal borrowing
• How much you can pay upfront today
• Your monthly income and outgoings, so they can work out disposable income; as a rule of thumb HMRC looks for around half of disposable income to go to the debt
• Your bank details, because plans collect by Direct Debit

None of it is a trick, but vague answers stall the call. The checklist in the pack lists every reference number and figure to have in front of you, so most people can agree the plan in one call.

What it costs: interest, and how to keep it down

There are no fees for a Time to Pay arrangement, but late payment interest runs on whatever is outstanding for the life of the plan. The rate is the Bank of England base rate plus 4 percentage points, which works out at 8% as at 15 July 2026 (rates last checked 15 July 2026). That has two practical consequences: pay as much upfront as you safely can, and pick the shortest term you can genuinely sustain rather than the longest one HMRC will allow.

The trap that catches most self employed people is next year. A 12 month plan for last year's bill runs straight through the next 31 January payment, so you are clearing arrears and saving for the new bill at the same time. That is exactly what the recovery budget workbook in the pack models: instalments and a next-year tax pot, side by side, with a warning when the months do not add up.

Rates and assumptions

Rates last checked: 15 July 2026. Interest shown assumes a Bank of England base rate of 4%, so base plus 4 percentage points is 8%.

What is an HMRC Time to Pay arrangement?

A Time to Pay arrangement is an instalment plan agreed with HMRC that spreads a tax bill you cannot pay in full, usually as monthly Direct Debit payments over up to 12 months. It stops further late payment penalties building on the debt included in the plan, though interest still runs, and HMRC will not chase enforcement while you keep to the payments.

Can I set up a Time to Pay arrangement online?

For Self Assessment, yes, if you owe £30,000 or less, it is within 60 days of the payment deadline, your returns are up to date and you have no other payment plans or debts with HMRC. You set it up through your Government Gateway account without speaking to anyone, choosing an upfront amount and monthly instalments over up to 12 months. Owe more, or need longer, and you phone instead.

What does HMRC ask when you call about Time to Pay?

Expect questions on why you cannot pay, what you have done to raise the money, how much you can pay upfront today, your income, your outgoings, savings and assets, and what you can realistically afford monthly. HMRC works from your disposable income, and typically expects around half of it to go towards the debt. The call preparation checklist in this pack covers every question with the numbers to prepare.

Does HMRC charge interest on Time to Pay arrangements?

Yes. Late payment interest runs on the outstanding balance for the life of the plan, at the Bank of England base rate plus 4 percentage points, which is 8% as at 15 July 2026. There are no set up fees, so the interest is the cost of the arrangement, and a shorter plan costs less.

Will HMRC refuse a Time to Pay arrangement?

HMRC agrees plans where it believes you genuinely cannot pay in full now but can pay over time. Refusals usually happen when returns are outstanding, when a previous plan was broken, or when the offer does not add up against your income and spending. Filing everything first and offering a sustainable amount you can evidence gives you the best chance.

What happens if I miss a Time to Pay payment?

A missed instalment can cancel the arrangement, making the full balance due and reopening penalties and enforcement action. If you know a payment will be a struggle, phone HMRC before the payment date; plans can often be renegotiated, but rarely after a silent default.

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