Cannot pay my tax bill

Your balancing payment for this year (2019/20) and, if applicable, an instalment for next year (2020/21) are due by 31st January 2021, along with your tax return.

If you cannot pay your tax bill due to coronavirus or other circumstances, you should call HM Revenue and Customs’ (HMRC) Business Payment Support Service (BPSS). HMRC will ask you questions about your income and expenditure, assets and what you are doing to get your affairs in order. If it thinks you genuinely cannot pay your tax, HMRC may grant you an extension to settle your taxes or agree a payment plan, also known as a ‘Time To Pay’ arrangement.

However, HMRC will not reduce the amount outstanding. They will agree a direct debit payment plan to help you spread the costs. These direct debit payments to HMRC do not incur late payment penalties or surcharges from the moment the payment plan is agreed, so long as you maintain their monthly payments. However, any payment plans agreed beyond the 31st January deadline incur 2.60% interest per annum.

If you don't think you can afford to pay your tax bill, you should contact HMRC as quickly as possible. You must keep these payments up to date and pay your other taxes on time. If you don’t, HMRC will normally cancel the arrangement and start legal action.

These arrangements are only eligible for self-assessment tax and those that owe £30,000 or less. Individuals must also have no existing HMRC payment plans in place and no outstanding tax debts.

If you don’t feel confident in negotiating with HMRC, feel free to contact us and we can liaise with HMRC on your behalf. Call 01423 871 870 or enquire online here.

Date published 26 Nov 2019 | Last updated 25 Aug 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.