How to Pay a Tax Bill When You Don't Have the Cash

The Problem: A Big Tax Bill and Not Enough Cash

It is more common than people think. You receive a tax bill — perhaps a Self Assessment liability, an unexpected capital gains charge, or an inheritance tax demand — and the number is significantly larger than the cash you have available. You are not broke. You may own property, investments, a business, a watch collection, artwork, or other valuable assets. But right now, in this moment, you do not have liquid cash to hand HMRC what they are demanding.

This is what we call the cash-poor, asset-rich problem, and it is especially acute when it comes to tax. HMRC does not care about your net worth — they want cash, and they want it by the deadline. Miss that deadline and the costs start compounding fast.

The good news is that you have more options than you might think. Some involve negotiating with HMRC directly. Others involve accessing the value locked in your assets without permanently parting with them. Let us walk through each option honestly, including the costs, timelines, and trade-offs.

Your Options for Paying a Large Tax Bill

1. HMRC Time to Pay Arrangement

HMRC's Time to Pay (TTP) scheme allows you to spread your tax payment over an extended period — typically up to 12 months, though longer arrangements are occasionally agreed for very large liabilities. You continue to be charged interest on the outstanding balance (currently 7.5% per annum), but critically, you avoid the late payment penalties that would otherwise apply.

For Self Assessment debts under £30,000, you can set up a payment plan online through your HMRC account. For larger amounts, you will need to contact the HMRC Payment Support Service on 0300 200 3835. The key requirement is that you contact HMRC before the payment deadline — if you wait until after, they are far less likely to be accommodating.

2. Bank Loans and Overdrafts

A personal loan or business overdraft is the most conventional financing option. High street banks will typically lend at rates between 3% and 12% depending on your credit profile and the amount. The advantage is simplicity — most people know how bank lending works. The downsides are the time it takes (application, credit checks, approval — often 1-2 weeks or more), the impact on your credit score, and the fact that banks often want to understand why you need the money. "I owe HMRC" does not always inspire confidence from a lending perspective.

3. Remortgaging Property

If you own property with equity, remortgaging can release cash at relatively low interest rates. Mortgage rates remain competitive compared to unsecured borrowing. However, remortgaging is slow — expect the process to take 4-8 weeks even with an existing lender, longer if switching. If your tax bill is due in days or weeks, this is unlikely to solve the immediate problem. There are also costs: arrangement fees, legal fees, and valuations. And you are putting your home at risk if you cannot keep up repayments.

4. Asset-Backed Lending

Asset-backed lending allows you to borrow against valuable assets you already own — property, shares, investment portfolios, or other tangible assets. Unlike a remortgage, specialist asset-backed lenders can often move quickly and are more flexible about the types of security they accept. This can be a smart middle ground: faster than a remortgage, often cheaper than an unsecured loan, and you keep your assets.

5. Luxury Asset Finance — The Option Most People Don't Know About

This is where things get interesting, particularly if you are someone who owns high-value personal possessions. Luxury asset finance allows you to borrow against watches, jewellery, fine art, classic cars, wine collections, and other luxury items — receiving a cash loan secured against the item, which you reclaim when you repay.

The mechanics are straightforward. A specialist lender values your item (for example, a Rolex Daytona, a Patek Philippe Nautilus, a diamond necklace, or a contemporary art piece), offers you a loan of typically 60-70% of its value, and holds the item as security. You pay interest on the loan, and when you repay, you get your item back. If you cannot repay, the lender sells the item to recover their money — but there is no further liability on you and no impact on your credit score.

For people with a watch collection worth £50,000 or jewellery worth £100,000 sitting in a safe, this can be a remarkably efficient way to fund a tax bill. You avoid the capital gains tax hit of selling (watches and jewellery are often exempt from CGT as "wasting assets," but other luxury items may not be), you retain your possessions, and you solve your cash flow problem in a matter of hours rather than weeks.

6. Selling Assets (The Last Resort)

Selling is always an option, but it should generally be a last resort — particularly if you are selling under time pressure. Forced sales almost always result in below-market prices. Selling investments may trigger additional capital gains tax, which creates a perverse cycle: selling to pay tax generates more tax. And once the asset is gone, it is gone — you lose any future appreciation. For a detailed analysis, read our guide on borrowing against assets vs selling.

If you must sell, at least explore whether borrowing against the asset first gives you time to achieve a better sale price. A short-term loan at 2-3% per month may be cheaper than accepting a 20% discount on a quick sale.

HMRC Late Payment Penalties and Interest: The Real Cost of Delay

Understanding the cost of not paying is critical to making the right decision. HMRC's penalty regime is designed to escalate quickly:

The message is clear: even if borrowing costs you money, it is almost certainly cheaper than letting HMRC penalties accumulate. A luxury asset loan at 2-3% per month, repaid within three months, is dramatically less expensive than a year of HMRC interest and penalties.

Inheritance Tax: The Catch-22 of Paying Before Probate

Inheritance tax presents a uniquely frustrating timing problem. IHT is due within 6 months of the date of death, and you typically need to pay at least some of it before HMRC will issue the paperwork needed to obtain a grant of probate. But without probate, you cannot access the deceased's bank accounts, sell their property, or liquidate their investments.

Some banks participate in the Direct Payment Scheme, which allows them to release money directly from the deceased's accounts to HMRC. However, this only works if the deceased had sufficient cash in UK bank accounts, and it does not help if the estate's value is tied up in property, investments, or physical assets.

This is another scenario where borrowing against luxury assets can provide a solution. If the estate includes valuable jewellery, watches, or art, a short-term loan secured against those items can provide the cash to pay HMRC, obtain probate, and then access the wider estate to repay the loan. It is a bridge — and often a very cost-effective one.

Comparison of Options: Speed, Cost, and Impact

For many people in the cash-poor, asset-rich bracket, the optimal strategy is a combination: apply for Time to Pay to stop the penalties, then use a luxury asset loan or asset-backed finance to cover the immediate shortfall, and arrange longer-term financing (a bank loan or remortgage) to repay the bridging finance over a comfortable period.

When to Consider Borrowing Against Luxury Assets

Luxury asset lending is not the right choice for everyone, but it is particularly well-suited to certain situations:

• You have a tight deadline. If your tax bill is due in days and you do not have cash, the speed of luxury asset lending (24-48 hours) is unmatched by any other option.
• You want to avoid credit checks. If you are self-employed, between jobs, have a complex financial profile, or simply do not want another enquiry on your credit file, luxury asset loans bypass the traditional credit assessment entirely.
• You are dealing with an IHT liability. When the estate includes valuable jewellery or watches but limited cash, borrowing against those items to pay the IHT and unlock probate is an elegant solution.
• You plan to repay within months. Luxury asset loans are most cost-effective as short-term bridges. If you know cash is coming (a bonus, a property sale, estate distribution), a 2-6 month loan against your watch or jewellery is straightforward and predictable.
• You do not want to sell assets in a down market. If you believe your luxury items will appreciate or you simply do not want to part with them permanently, borrowing preserves your ownership.