HMRC Time to Pay

HMRC’s Time to Pay

Understanding HMRC’s Time to Pay Arrangement to spread to cost of tax payments

In the current economic climate, marked by inflation and cost-of-living challenges, UK taxpayers may find the upcoming tax payment deadlines daunting. The deadline for clearing any tax arrears for the 2022-23 financial year and the first payment for 2023-24 is set for 31 January 2024. However, HM Revenue and Customs (HMRC) offers a helpful solution through the Time to Pay (TTP) arrangement.

What is Time to Pay?

TTP is a scheme designed to help those who cannot afford to pay their entire tax bill by the due date. It enables eligible taxpayers to spread their tax payments over a period, making it more manageable financially.

Eligibility and Application Process

Self-Assessment Tax Liabilities

TTP is available for self-assessment tax liabilities up to £30,000. To be eligible, you must have filed your latest tax return within 60 days of the payment deadline and plan to settle your dues within the next 12 months.

Negotiating with HMRC

For debts like Corporation Tax, PAYE, or VAT, negotiation with HMRC is necessary. It’s crucial to be honest about what your company can afford and not to overstate this figure.

Duration and Payments

Typical Duration

Usually, the arrangement spans 12 months, but it can be extended depending on your business circumstances and affordability​.

Concurrent Payments

You must continue to make any new or current payments to HMRC in addition to the TTP payments

Principles and Guidelines

No Reduction in Tax Owed

Entering into a TTP arrangement does not reduce the total amount of tax owed. The instalments must be over the shortest time period reasonably possible.

Risk-Based Decision

HMRC’s decision to agree to a TTP is based on the risk involved. They may require additional information if there is a greater amount of risk​.

Consequences and Considerations

Defaulting on Payments

If you fail to keep up with the agreed payments, HMRC can terminate the arrangement. TTP is intended for temporarily distressed companies that have future viability. If your company faces insolvency, the arrangement may be cancelled​.

Interest on Outstanding Tax

While TTP helps avoid late payment penalties, interest will be charged on the outstanding tax amount.

Importance of Timely Contact with HMRC

If you are facing difficulties in paying your tax bill, or foresee potential challenges in meeting future tax obligations, contacting HMRC at the earliest opportunity is essential.

This proactive approach can increase the likelihood of successfully negotiating a TTP arrangement.

Awareness of Scams

Taxpayers are advised to be cautious of scams and never share their HMRC login details or personal data with anyone. For guidance on avoiding scams, refer to the HMRC scams advice on GOV.UK.

The Time to Pay arrangement is a significant relief for individuals and businesses, enabling them to manage their tax payments more feasibly. It reflects HMRC’s understanding of the financial challenges faced by many in the UK. For more detailed information and to explore all available payment options, visit the HMRC section on GOV.UK.


How do I apply for Time To Pay?2024-01-24T12:21:31+00:00

You can apply online through your HMRC account if you meet the criteria. For larger debts or more complex situations, you should contact HMRC directly to discuss a tailored agreement.

Is there interest charged on Time to Pay Arrangements?2024-01-24T12:20:16+00:00

Yes, HMRC usually charges interest on the outstanding tax balance, even under a Time To Pay Arrangement.

Can businesses use Time to Pay for Corporation Tax and VAT?2024-01-24T12:18:10+00:00

Yes, businesses struggling to pay Corporation Tax, VAT, or PAYE can negotiate a Time to Pay Arrangement with HMRC.

How long can a Time To Pay Arrangement last?2024-01-24T12:16:47+00:00

While most Time To Pay arrangements are designed to be repaid within 12 months, HMRC may extend this period depending on your circumstances.

Will Time To Pay affect my credit rating?2024-01-24T12:13:45+00:00

Entering into a Time to Pay Arrangement does not in itself affect your credit rating, but late payments or defaulting on tax obligations may have an impact.

Can I use Time to Pay for multiple tax debts?2024-01-24T12:11:10+00:00

Yes, it’s possible to include multiple tax debts in a single Time to Pay Arrangement, subject to HMRC’s agreement.

How can I ensure my Time to Pay Arrangement is approved?2024-01-24T10:14:04+00:00

The best way to increase your chances of your Time to Pay Arrangement to be approved is to be honest and realistic about your financial situation when negotiating with HMRC. Provide accurate information and a sensible repayment plan that reflects your ability to pay.

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In Conclusion

In conclusion, HMRC’s Time to Pay Arrangement stands as a vital lifeline for UK taxpayers facing financial difficulties. Whether you’re an individual or a business, this arrangement offers a practical solution to manage tax obligations in a more structured and less burdensome manner. By allowing taxpayers to spread their payments over an agreed period, it alleviates the immediate financial pressure and provides much-needed breathing space.

It’s crucial, however, to approach this option with a clear understanding of its terms, eligibility criteria, and implications. Honest communication with HMRC, realistic assessment of your financial situation, and adherence to the agreed payment plan are key to successfully navigating this arrangement. While it does include interest charges, the ability to avoid more severe penalties and enforcement actions can be significantly beneficial.

This arrangement underscores HMRC’s commitment to supporting taxpayers through challenging times while maintaining the integrity of the tax system. As always, for specific concerns or unique situations, seeking advice from a tax professional or directly contacting HMRC is advisable for the most relevant and personalised guidance.

By considering the Time to Pay Arrangement, taxpayers can find a manageable way to fulfil their obligations, ensuring financial stability and peace of mind during times of economic uncertainty.

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