What should you do if you can’t pay your tax bill?

Book a meeting

Struggling to pay your tax bill and not sure what you should do? Here’s a little guide to help you navigate the process.

If any of the following apply to you, the first thing you are going to want to do is call HM Revenue and Customs’ (HMRC) income tax helpline.

You’re getting close to a payment deadline and already know you won’t be able to pay your tax
You’ve already missed the deadline
You think your statement is wrong

If you don’t pay your tax bill on time, you’re likely to end up paying interest and fines on the outstanding amount.

Payment plans

If you are unable to pay your tax bill, you might be eligible to set up a ‘Time to Pay’ arrangement. This is a payment plan that gives you the opportunity to pay it in instalments rather than all at once.

It’s important to note that HMRC will not let you set up a payment plan if they believe you will not keep up with the repayments. If this is the case, they will ask you to pay the amount in full.

You may be able to set up a payment plan online, depending on which type of tax you owe and how much money you owe.

What HMRC will need to know

You will need to be prepared to explain in detail why you can’t pay your tax bill when you get through to HMRC.

They will ask you various questions about your finances and spending habits.

You may be asked the following:

What you earn
How much your household bills are
What other family members earn
How much you spend on clothes or holiday
What savings you have

Make sure you have the answers to these questions before you call to ensure the answers you give are accurate.

If you have any extenuating circumstances that are linked to you not being able to make the payment, for instance, you have been on long-term sick leave, be sure to mention this.

How much will I pay?

The amount HMRC will ask you to pay each month will vary from person to person. They calculate it based on how much you have left after you pay any rent, food, utility bills and any fixed outgoings you have, like subscriptions.

Once this has been assessed you’ll typically be asked to pay around half of how much you have left.

If you are in a position to pay more than that amount each month, you can arrange to do so. The quicker you pay off your debt, the better off you will be as you’ll pay less in total due to you paying less interest.

There is no limit on how long a payment plan can last, it simply depends on how much you can pay each month. If you miss a payment, HMRC will contact you to find out why.

What happens if you don’t contact HMRC or refuse to pay?

HMRC will always make many attempts to contact you should you miss a tax payment. They will post letters, send texts, and they may even make a visit to your home or place of work.

If you do not get in contact with HMRC or cannot agree to your plan they may: