HMRC Time to Pay — What You Need to Know

What Is HMRC Time to Pay?

HMRC Time to Pay (TTP) is an arrangement that allows taxpayers who are unable to pay their tax bill in full by the due date to spread the payment over a series of monthly instalments. It is not a right — it is a concession that HMRC grants on a case-by-case basis, and the terms are negotiated individually.

A Time to Pay arrangement can apply to virtually any tax debt: self-assessment income tax, capital gains tax, corporation tax, VAT, PAYE, and in some cases inheritance tax. The key requirement is that you demonstrate a genuine inability to pay in full, combined with a realistic plan for clearing the debt over time.

Once an arrangement is in place, HMRC will not pursue enforcement action (such as instructing debt collectors or issuing distraint) as long as you keep to the agreed payment schedule. Late payment penalties are also typically suspended, though interest continues to accrue.

Who Qualifies?

In principle, any taxpayer can request a Time to Pay arrangement. However, HMRC is more likely to agree if:

• You have a reasonable compliance history — your tax returns are up to date and you have not previously defaulted on a TTP arrangement.
• Your financial difficulty is genuine and temporary — you can demonstrate that a change in circumstances (illness, business downturn, unexpected expense) has made it impossible to pay on time.
• You have a credible repayment plan — you can show that your future income will be sufficient to clear the debt within the proposed timeframe.
• You have already explored other options — HMRC expects you to have considered borrowing, reducing expenditure, or liquidating non-essential assets before asking for a payment plan.

How to Apply

There are two main routes to setting up a Time to Pay arrangement:

Online (for Self Assessment debts up to £30,000)

If you owe £30,000 or less in self-assessment tax, have no other outstanding tax debts, and your tax returns are up to date, you can set up a payment plan online through your HMRC personal tax account. The system allows you to choose your instalment amount and payment dates, and the arrangement is confirmed immediately. This is the fastest route and avoids the need to speak to anyone.

By Telephone (for larger amounts or other tax types)

For debts above £30,000, or for taxes other than self-assessment, you will need to call the HMRC Payment Support Service on 0300 200 3835. You will speak to a debt management advisor who will ask about your financial circumstances and negotiate the terms of the arrangement. Be prepared to provide details of your income, essential expenditure, assets, and any other debts.

What HMRC Considers When Deciding

During the telephone application, HMRC will assess several factors:

• Your income: employment income, self-employment profits, rental income, investment returns, pension income, and any other sources.
• Your essential expenditure: mortgage or rent, council tax, utilities, food, insurance, and minimum payments on other debts.
• Your assets: property, savings, investments, and valuable personal possessions. HMRC may ask why you cannot liquidate these to pay the bill.
• Your disposable income: the difference between income and essential expenditure, which determines the maximum monthly payment you can realistically afford.
• Your compliance track record: a history of filing on time and paying on time works in your favour. Previous defaults or penalties count against you.

Typical Payment Plan Durations

Most Time to Pay arrangements run for 6 to 12 months. HMRC generally prefers shorter plans and will push for the fastest repayment schedule your finances can support. Plans beyond 12 months are possible but less common, and typically require more detailed evidence of financial hardship.

For very large debts (six figures and above), HMRC may agree to longer plans of up to 24 months, but these are negotiated on a case-by-case basis and usually involve more senior HMRC officials. The larger the debt, the more detailed the financial information you will need to provide.

Interest Charges During a Payment Plan

A Time to Pay arrangement does not freeze interest. HMRC charges late payment interest at the Bank of England base rate plus 2.5%. As of February 2026, this stands at 7.25%. Interest is calculated daily on the outstanding balance, so the sooner you clear the debt, the less interest you pay.

To put this in perspective: on a £100,000 tax debt spread over 12 months, you would pay approximately £3,900 in interest. On a £50,000 debt over 6 months, the interest cost would be approximately £1,100.

What Happens If You Default

If you miss a payment or fail to keep to the agreed schedule, HMRC will typically issue a warning and give you a short period to get back on track. However, if the default continues, HMRC can:

• Cancel the Time to Pay arrangement entirely, making the full remaining balance payable immediately.
• Impose late payment penalties that were previously suspended.
• Instruct debt collection agencies to pursue the debt on their behalf.
• Apply to the county court for a County Court Judgment (CCJ), which affects your credit rating.
• In extreme cases, petition for bankruptcy (individuals) or winding up (companies).

The message is clear: only agree to a payment schedule you can genuinely maintain. It is better to negotiate a longer plan with lower monthly payments than to agree to an ambitious schedule and then default.

Tips for Negotiating with HMRC

• Be honest and transparent. HMRC officers are experienced at spotting inconsistencies. Present your financial position accurately and completely.
• Prepare your figures before calling. Have a clear picture of your monthly income and expenditure, a list of your assets and debts, and a proposed repayment schedule ready.
• Offer the largest initial payment you can. Even a partial payment upfront demonstrates good faith and reduces the balance that accrues interest.
• Be realistic about your repayment capacity. Do not promise more than you can deliver. A defaulted arrangement is worse than a longer one completed successfully.
• Consider professional representation. An accountant or tax advisor can negotiate on your behalf, and their experience with HMRC processes often results in better terms.

When Time to Pay Is Not Enough

Time to Pay is a useful tool, but it has significant limitations. The interest rate is high, the plans are relatively short, and HMRC has considerable power if you default. For asset-rich individuals, there are often better options:

• Asset-backed lending — borrow against property or investments at potentially lower interest rates than HMRC charges, with more flexible repayment terms. Learn more →
• Luxury asset finance — if your wealth is in art, jewellery, or collectibles, specialist lenders can provide funds secured against these items. Learn more →
• Combination approach — use a short Time to Pay arrangement to avoid immediate penalties while securing longer-term finance against your assets to clear the debt in full. Explore all options →