If you can't pay your Self Assessment bill in full, you can set up an HMRC Time to Pay arrangement to spread the cost over monthly instalments, usually up to 12 months. If you owe £30,000 or less, you can do it yourself online without phoning HMRC, provided you've already filed your tax return and you're within 60 days of the payment deadline. You'll still pay interest, but a plan stops the bigger late-payment penalties stacking up.
What is HMRC Time to Pay?
Time to Pay is HMRC's instalment scheme for people who owe tax they genuinely can't clear in one go. Instead of one lump sum by 31 January, you agree a schedule of monthly Direct Debit payments. It's not a way to delay tax you can afford, it's a structured route out of a real cash-flow squeeze.
For Self Assessment, the online version is often called a self-serve Time to Pay arrangement. Once it's set up and you keep to it, HMRC won't chase you with debt collection while the plan is running.
Who qualifies for an online Self Assessment payment plan?
You can set up a payment plan online yourself if all of these apply:
- You owe £30,000 or less.
- You've already filed your latest Self Assessment return.
- You're within 60 days of the payment deadline.
- You don't have other tax debts or existing HMRC payment plans.
If you owe more than £30,000, need longer than 12 months, or don't meet the other conditions, you can still get a plan, but you'll need to call HMRC's Self Assessment Payment Support Service and talk through your income and outgoings.
What if I haven't filed my return yet?
You can't set up a Time to Pay arrangement until your return is submitted, because HMRC needs to know the exact figure owed. File first, then arrange the plan. Leaving the return unfiled also triggers separate late-filing penalties, so don't sit on it.
How to set up Time to Pay online: step by step
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- File your Self Assessment return so the amount owed is confirmed on your account.
- Sign in to your HMRC online account (Government Gateway) and go to the Self Assessment section.
- Open the official set up a payment plan service on GOV.UK.
- Confirm the amount you owe and choose how much you can pay upfront.
- Pick the number of monthly instalments (up to 12), the tool shows you the monthly figure including interest.
- Set up the Direct Debit. HMRC collects each instalment automatically on the agreed date.
The whole process takes a few minutes if your figures are in order. You don't need an adviser to do it, but it's worth getting the numbers right first so you don't agree to instalments you can't actually meet.
How much interest does HMRC charge on a payment plan?
Time to Pay isn't free. HMRC charges late-payment interest on the outstanding balance from the day after the deadline until the debt is cleared. The rate tracks the Bank of England base rate plus a margin, so check the current figure on GOV.UK before you commit.
Crucially, interest is usually far cheaper than the late-payment penalties you'd otherwise face, typically 5% of the unpaid tax at 30 days, with further 5% charges at 6 and 12 months. A live, kept-to payment plan generally protects you from those penalty charges, which is the main reason to set one up early rather than ignore the bill.
What if I miss a payment?
If you miss an instalment or your Direct Debit bounces, HMRC can cancel the arrangement and demand the full remaining balance, with penalties and interest back in play. If your circumstances change, contact HMRC before a payment fails, they can sometimes adjust the schedule. The worst move is to go quiet.
Does a Time to Pay plan affect my payments on account?
Yes, keep this in mind. Many taxpayers owe a balancing payment plus a payment on account in January, with a second payment on account due 31 July. If you wrap a January shortfall into a 12-month plan, your July payment on account still lands on top. Map both deadlines before you set the monthly figure, or you'll end up double-stretched in the summer.
If your income has dropped, you may be able to reduce your payments on account, but only if your figures genuinely support it. Get this wrong and HMRC charges interest on the shortfall. This is exactly the kind of judgement call our tax advisory services are built for.
Time to Pay vs paying late, the quick comparison
- Pay in full on time: no interest, no penalties. Always the cheapest option if you can.
- Time to Pay plan: interest applies, but penalties are generally avoided while you keep to it.
- Ignore the bill: interest and escalating penalties, plus possible debt collection. The most expensive path by far.
For more common Self Assessment questions, see our FAQ.
Talk to a Zmartly accountant
If you're staring at a tax bill you can't clear, you don't have to sort it alone. We'll check your figures, confirm whether an online plan or a phone arrangement fits your situation, and make sure your payments on account aren't about to catch you out. Get in touch with a Zmartly accountant and we'll help you set up an affordable plan with confidence.
