If you cannot pay your tax bill on time, you may be able to set up a Time to Pay (TTP) arrangement with HMRC. This allows you to spread the cost over monthly instalments rather than paying everything at once. Nearly 18,000 Self Assessment payment plans were set up online between April and December 2025, according to HMRC data. Setting up a TTP before the payment deadline stops late payment penalties from accruing, though interest continues to run on the outstanding balance.

What is a Time to Pay arrangement?

A TTP arrangement is a formal agreement with HMRC to pay outstanding tax in monthly instalments. It is available for most tax types, including Self Assessment, VAT, PAYE, and Corporation Tax. Arrangements typically run for 6 to 12 months, though HMRC can agree longer terms in exceptional circumstances.

A TTP does not cancel the debt or stop interest from accruing. What it does is prevent further late payment penalties from building up, provided you stick to the agreed instalments.

Key rule: A Time to Pay arrangement must be in place before penalties accrue to prevent them. If you wait until 15 days after the deadline, you will already have incurred the first late payment penalty. Contact HMRC or apply online as early as possible.

Who is eligible?

HMRC grants TTPs to taxpayers who genuinely cannot pay in full, not to those who choose not to pay. To be considered, you should:

  • Have all outstanding returns filed and up to date
  • Not have any other existing TTP arrangements with HMRC (or be able to combine them)
  • Be able to demonstrate that your financial difficulty is temporary
  • Propose a realistic repayment plan based on your income and expenditure

Online self-serve: key limits (2026)

Tax typeOnline TTP limitKey conditions
Self AssessmentUp to £30,000Return filed, within 60 days of payment deadline, no existing TTP
VATUp to £50,000Accounting period starting 2023 or later, up to 12 months, not on cash or annual accounting scheme
PAYE (employers)Up to £100,000Submissions up to date, within 35 days of charge date

For debts above these thresholds, or where eligibility criteria are not met, you must contact HMRC directly to negotiate a manual arrangement.

How to apply for a Self Assessment TTP online

  1. File your Self Assessment return if you have not already done so. A TTP cannot be set up until the return is submitted.
  2. Log in to your HMRC online account via GOV.UK.
  3. Navigate to your Self Assessment record and select the payment option.
  4. Check whether you meet the online eligibility criteria (debt under £30,000, within 60 days of deadline).
  5. Complete the income and expenditure details requested.
  6. Confirm the monthly instalment amount and start date.

How to apply by phone

For debts above the online limits, or where the online service is unavailable, call HMRC's payment support line on 0300 200 3835. For Self Assessment debts, call 0300 200 3822. Have the following ready before you call:

  • Your Unique Taxpayer Reference (UTR) or VAT registration number
  • A summary of your income and regular outgoings
  • Details of any other HMRC debts or existing payment plans
  • A proposed monthly instalment amount you are confident you can sustain

What HMRC will ask you

HMRC will conduct an affordability assessment. You should be prepared to explain why you cannot pay in full, how much you can afford each month, and when you expect your financial situation to improve. HMRC typically does not ask you to pay more than 50 per cent of your disposable monthly income.

If you are a business, HMRC may ask for cash flow forecasts, recent bank statements, and information about outstanding invoices or upcoming contracts.

Interest during a Time to Pay arrangement

Interest continues to accrue on the outstanding balance throughout the TTP period. The current rate is 8.25% per annum (from May 2025), calculated daily. Each payment you make reduces the balance and therefore reduces the daily interest charge. Paying early or paying more than the agreed amount saves money on interest.

What happens if you miss a payment?

Missing a TTP instalment puts the arrangement at risk. Contact HMRC immediately if you think you will miss a payment. HMRC may be willing to renegotiate the terms, particularly if your circumstances have changed. If you do not contact HMRC and simply miss payments, the arrangement is likely to be cancelled. Once a TTP is cancelled, penalties can recommence on the outstanding balance and HMRC may take enforcement action.

Tips for a successful TTP application

  • Apply as early as possible, ideally before the payment deadline.
  • File all outstanding returns before applying.
  • Propose a realistic amount. Offering more than you can sustain and then missing payments is worse than proposing a longer, lower-amount plan.
  • Offering a part-payment upfront alongside a TTP for the remainder is viewed positively by HMRC.
  • Keep future tax obligations up to date. HMRC will not continue a TTP if you are accumulating new debts.
Disclaimer: This guide provides general information only. It is not regulated financial or legal advice. Figures are accurate as of March 2026 and are subject to change. Consult a qualified accountant for advice specific to your circumstances.