What to do if you are struggling to pay your tax bill

The first step is to contact HMRC as soon you can and discuss your options.

It is important to contact HMRC as soon as possible if it’s likely your are going to struggle to pay your tax bill. If you do not pay it in full on time, HMRC can issue fines and accrue interest on the outstanding amount.

Time to Pay

If you cannot pay your tax bill in full, you may be able eligible to set up a payment plan with HMRC to pay it in instalments. HMRC has called this a ‘Time to Pay’ arrangement. You will need to speak to HMRC to let them know that you are unable to pay your tax bill.

You can set up a Self Assessment payment plan online if you meet the following criteria:

• Have filed your latest tax return
• Are within 60 days of the payment deadline
• Owe £30,000 or less
• Do not have any other payment plans with HMRC

Paying through Self Assessment

If you do not meet the above criteria, then you can contact HMRC on 0300 200 3820 for a payment plan through Self Assessment. You will need your Unique Tax Reference (UTR), address and postcode, your UK bank details, total amount outstanding and details of your income and spending.

HMRC phone lines are very busy and you may have to wait, it is recommended that you try phoning early in the day between 8am and 10am.

‘Time to Pay’ agreements aren’t granted to everyone, HMRC will consider your individual circumstances and the overall situation. It is important to contact HMRC as soon as you realise that you cannot pay your tax liability.

What happens if you do not pay your tax liability?

If you do not pay your tax liability, HMRC will try to contact you and discuss your circumstances and how to pay. This could include:

• Deductions from your wages or pension
• Using a debt collection agency to recover the money
• Seizing and selling your possessions
• Taking funds directly from your bank account
• Take you to court
• Making you bankrupt

The importance of contacting HMRC straightaway

It is therefore vital that you contact HMRC as soon as you know you are likely to struggle with payments. The earlier you arrange a repayment plan, the more flexible and favourable the outcome is likely to be.

If you ignore HMRC’s payment requests or refuse to settle tax you acknowledge is owed, they may appoint a debt collection agency to act on their behalf. These agencies will usually get in touch by phone or letter to discuss your outstanding balance and may help arrange a ‘Time to Pay’ on behalf of HMRC. Should you be unable to make payments or fail to reach an agreement, your case will be returned to HMRC for further action.

HMRC only work with approved debt collection agencies and have clear ways to verify the identity of an official collector. Always check these details if you are contacted, to make sure the approach is genuine and not a scam.

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