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Paying & refunds

Self Assessment payment plans (Time to Pay)

If you can't pay your Self Assessment bill in full, HMRC may let you pay in monthly instalments. This is called a Time to Pay arrangement. Here's how it works, when you can set it up online, and how to avoid extra penalties.

TaxGo Editorial TeamLast reviewed · Tax year 2025/263 min read
Contents
  1. 01What a payment plan is
  2. 02Setting one up online
  3. 03Interest and penalties
  4. 04Budget payment plans (paying in advance)
  5. 05If you miss a payment
  6. 06Before you apply

Key takeaways

  • HMRC can let you spread an overdue tax bill into monthly Direct Debit payments.
  • Many people can set it up online without calling — HMRC checks it's affordable.
  • Interest still applies, but a plan agreed in time can stop late payment penalties.
  • Act early: the longer you leave it, the more interest and penalties build up.

What a payment plan is

A Self Assessment payment plan — known as Time to Pay — lets you clear an overdue tax bill in monthly instalments by Direct Debit, rather than paying everything at once. HMRC will check the plan is affordable based on your income and spending.

Setting one up online

HMRC's online service is usually available if all of the following apply (check the current conditions on GOV.UK, as limits can change):

  • You've filed your latest tax return.
  • You owe £30,000 or less.
  • It's within 60 days of the payment deadline.
  • You don't have other HMRC payment plans or debts.

You'll need your UTR, your UK bank details (you must be able to set up a Direct Debit), and details of your income and spending. If you don't meet the online conditions, you can still call HMRC's Payment Support Service.

Useful tool

Know your bill before you plan: get an illustrative estimate.

Work out what you owe

Interest and penalties

Interest is charged on the unpaid amount for the whole time it's outstanding, including during the plan. From 6 April 2025, late payment interest is the Bank of England base rate plus 4%.

Late payment penalties of 5% are added at 30 days, 6 months and 12 months after the deadline. Setting up a Time to Pay arrangement before a penalty date can prevent that penalty. See Self Assessment penalties.

Budget payment plans (paying in advance)

If your bill isn't due yet, you can set up a budget payment plan to make regular Direct Debit payments towards your next bill. It's a good way to avoid January surprises, especially if you make payments on account.

If you miss a payment

Contact HMRC straight away. If you miss instalments without telling them, HMRC can cancel the arrangement and ask for the full amount.

Know your number early

Most January cash-flow problems come from not knowing the bill until the last minute. Prepare your return with TaxGo as soon as the tax year ends and you'll have months to plan.

Before you apply

HMRC will want to see that the instalments are realistic. Before you start, work out:

  • Your monthly take-home income, from all sources.
  • Your essential monthly spending: rent or mortgage, utilities, council tax, food, transport, childcare and other debts.
  • How much you can genuinely afford each month after that.
  • Whether you can pay a lump sum up front to reduce the plan.

Make sure your latest tax return is filed first — HMRC can't agree a plan for a bill it hasn't calculated, and filing late adds penalties on top of the debt.

Next year's payments on account

A payment plan covers what's overdue. If you also have payments on account coming up, factor those in — or ask HMRC to reduce them if your income has fallen.

Questions people ask

Will a payment plan affect my credit score?

A Time to Pay arrangement is between you and HMRC and isn't usually reported to credit reference agencies. Unpaid tax debts that go to enforcement are a different matter.

How long can a payment plan last?

It depends on what HMRC decides is affordable. Online plans are generally shorter; longer arrangements may need a call with HMRC.

Do I still pay interest on a payment plan?

Yes. Interest is charged on the outstanding amount until it's paid.

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Related guides

This guide is general information based on HMRC guidance for the 2025/26 tax year, not personal tax advice. Rules and rates change — check GOV.UK or speak to a qualified adviser about your circumstances.

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