Spreading Tax Payments Using Time to Pay: How HMRC Arrangements Work

This guidance is for taxpayers who are unable to pay a tax bill in full and want to know whether they can spread their tax payments using HMRC’s Time to Pay arrangement.

Time to Pay can allow tax to be settled in instalments, but it is not automatic and does not apply in every situation. If the rules are misunderstood, taxpayers can still face interest, penalties, or enforcement action. This page explains how spreading tax payments using Time to Pay works and when it may be available.

Paying a Self-Assessment Tax Bill in Instalments Through HMRC

Can’t pay your tax bill in full by 31 January 2025? HMRC’s online Time to Pay system lets self-assessment taxpayers spread the cost over monthly instalments. With plans available for tax bills up to £30,000, this flexible option can help you avoid late payment penalties.

Those eligible for the self-serve option can arrange payments online without needing to contact an HMRC adviser. HMRC has revealed that more than 15,000 taxpayers have already set up a Time to Pay payment plan for the 2023-24 tax year.

To qualify for the online Time to Pay option, taxpayers must meet these conditions:

• No outstanding tax returns
• No other tax debts
• No existing HMRC payment plans

For taxpayers who do not meet these requirements or owe more than £30,000, other payment arrangements may be available. These are typically agreed on a case-by-case basis, tailored to individual circumstances and liabilities, allowing businesses and individuals to pay off their debt over time.

HMRC’s Director General for Customer Services, said:

We’re here to help customers get their tax right and if you are worried about how to pay your self-assessment bill, help and support is available. Customers can set up their online payment plan to suit their own financial circumstances and can spread those payments across a maximum of 12 months. It is a valuable option for someone needing extra flexibility in meeting their tax obligations.

Risks of Spreading Tax Payments Incorrectly

If you assume that spreading payments is automatically allowed and delay action, HMRC will normally treat the tax as overdue. This can result in late payment interest and, in some cases, penalties.

Time to Pay arrangements do not stop interest from accruing, and where no agreement is in place, HMRC may move towards debt collection or enforcement action.

In Practice – Common Misunderstandings About Time to Pay

In practice, we often see taxpayers assume that requesting Time to Pay will automatically be accepted or that spreading payments prevents interest from being charged. This is a point a tax consultant in London regularly has to clarify, as requests are frequently refused where HMRC is contacted too late or where the proposed instalments are not considered affordable.

For practical support, experienced accountants in Fulham Broadway work with individuals and businesses across nearby areas such as Munster Village and Bishop’s Park when considering Time to Pay arrangements and engaging with HMRC. At CIGMA Accounting, our team can help you assess whether spreading tax payments is a realistic option and advise on how to approach HMRC in a clear and credible way. Find out more about our accounting support in London.

HMRC explains when you may be able to spread tax payments using Time to Pay, and how to apply, in its official guidance on GOV.UK.

Check Whether You Can Spread Your Tax Bill Using Time to Pay

Spreading tax payments may be possible in certain circumstances, but it depends on timing, affordability, and your wider tax position. A short review now can help confirm whether Time to Pay is an option for you and what HMRC is likely to expect.