Tax Payment Plan

Tax Payment Plan

posted on February 17, 2021

by: Ian Marlow / 1 comments / BusinessPersonal Tax Returns

If you cannot pay your tax bill then you can set up a tax payment plan with HMRC if you owe Self Assessment tax. If your bill is less than £30,000 you may be able to pay in monthly instalments. If you pay a tax bill late you must pay interest on the amount you owe until it’s paid off but you can avoid penalties by arranging a payment plan with HMRC before the tax is due – or by 2 March for Self Assessment.

For any other bills or problems paying, you must contact HMRC to discuss your options. How you contact HMRC depends on what you need to pay.

Payment plans or payments in full must be in place by midnight on 1‌‌ April to avoid a late payment penalty. To add to the urgency, HMRC has announced that Self Assessment customers will not be charged the initial 5% late payment penalty if they pay their tax or make a Time to Pay arrangement by 1‌‌ April.

The payment deadline for Self Assessment is 31 January and interest will be charged from 1 February on any amounts outstanding. The deadline has not changed, but this year, because of the impact of COVID 19, HMRC is giving taxpayers more time to pay or set up a payment plan.

If you’re self-employed

You can set up a tax payment plan online to spread the cost of your latest Self Assessment bill if:

  • you owe £30,000 or less
  • you do not have any other payment plans or debts with HMRC
  • your tax returns are up to date
  • it’s less than 60 days after the payment deadline

Nominated partners in business partnerships can negotiate a Time to Pay Arrangement with HMRC on behalf of the partnership or individual partners.

Call the Self Assessment helpline if you’re not eligible for a tax payment plan or cannot use the online service.

Self Assessment Payment Helpline
Telephone: 0300 200 3822
Monday to Friday, 8am to 6pm (closed on bank holidays) 

If you cannot pay other taxes

You might be able to set up a Time to Pay Arrangement with HMRC if you’re unable to pay any other taxes in full. This lets you spread the cost of your tax bill by paying what you owe in instalments.

How you do this depends on whether you’ve received a payment demand.

  • If you’ve received a payment demand, like a tax bill or a letter threatening you with legal action, call the HMRC office that sent you the letter.
  • If you’ve not received a bill or letter, call the Payment Support Service (PSS).

Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 6pm (closed on bank holidays)

If you cannot pay because of coronavirus

You may be able to pay your Self Assessment tax in monthly instalments. This includes any delayed (deferred) ‘payments on account’ that were due in July 2020, if you did not pay them at the time. Contact the HMRC coronavirus helpline if you cannot pay any other tax bills because of coronavirus.

Telephone: 0800 024 1222
Monday to Friday: 8am to 4pm
Closed on weekends and bank holidays.

Online payment plans

Almost 25,000 Self-Assessment customers have set up an online tax payment plan to manage their tax liabilities in up to 12 monthly instalments, totaling £69.1 million, HMRC revealed recently.

In October, HMRC increased the threshold for self-serve Time to Pay arrangements from £10,000 to £30,000 for Self-Assessment taxpayers. Once they have completed their 2019-20 tax return and know how much tax they owe, taxpayers can use the self-serve facility to set up monthly direct debits and spread the cost of their tax bill.

Taxpayers can apply for the payment plan via GOV.UK. However, they must meet the following requirements:

  • they need to have no outstanding tax returns
  • and other tax debts
  • or other HMRC payment plans set up
  • the debt needs to be between £32 and £30,000
  • the payment plan needs to be set up no later than 60 days after the due date of a debt

So, there are plenty of options for setting up a tax payment plan; just makes sure that you contact HMRC as soon as possible. And we suggest you try as soon as the lines open as they get very busy during the day.


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Ian Marlow

Managing Director

Ian Marlow, an Elite Advisor for Quickbooks Online, has a passion for helping individuals and businesses in all aspects of online accounting and leads an experienced team of tax and accounting professionals.
17th February 2021
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