Contact HMRC early about payment support and file the return even if you cannot pay the whole bill. Check whether a Time to Pay arrangement is available. A payment plan is different from an appeal, and interest or penalties can still depend on when you act and the terms agreed.
First, work out which problem you have
There are two common situations, and they are not the same tool on GOV.UK:
- The bill is overdue, or you cannot pay what you already owe. You may be able to set up a payment plan (often called a Time to Pay arrangement) to pay an overdue Self Assessment debt in monthly instalments, if HMRC agrees it is affordable.
- You are not overdue yet, but January or July will be hard. If you are up to date with your last Self Assessment bill, you may be able to set up a Budget Payment Plan: weekly or monthly Direct Debit payments towards your next bill so less is left at the deadline.
GOV.UK also has a checker for which regular-payment option may be available. Use that before you guess.
If you cannot pay an overdue Self Assessment bill
HMRC’s “cannot pay on time” guidance says you may be able to pay in instalments. HMRC will check whether a plan is affordable. If you cannot agree a plan, they can still ask you to pay the full amount.
To set up a plan online you will usually need:
- your Self Assessment payment reference (your 10-digit UTR followed by the letter K)
- UK bank details you are authorised to use for Direct Debit
- a clear picture of income and spending
If you cannot set a plan up online, contact HMRC and be ready to say whether you can pay in full, how much you can repay each month, what other tax you owe, what you earn and spend, and what savings or investments you hold. GOV.UK is clear that HMRC will expect you to use savings or assets to reduce the debt where you can. Independent debt advice documents such as a Standard Financial Statement can help evidence affordability.
If the bill is still ahead of you
A Budget Payment Plan is for people who are up to date on the last Self Assessment bill and want to drip-feed money towards the next one. You choose weekly or monthly amounts in your HMRC account under Direct Debit. You can pause payments for up to six months if you need to. If the plan does not cover the whole bill, you still pay the difference by the usual deadline. If you overpay, you can ask for a refund.
What not to do
Do not ignore letters or your online balance. Late payment can attract interest, and unpaid tax can attract late payment penalties on top. Filing on time still matters even while you arrange payment. Late filing penalties are a separate problem covered in late Self Assessment penalties.
Also check whether part of what looks “unpayable” is actually a payment on account that should be reduced because this year’s income is lower. That is a different process: how to reduce payments on account.
Practical sequence that usually helps
- Sign in and read the current balance and due dates, not just the paper letter.
- Separate balancing payment, payments on account, interest and penalties in your head (or on paper).
- Use GOV.UK’s payment-plan tools for overdue tax, or a Budget Payment Plan if you are still ahead of the deadline and up to date.
- Pay something you can afford through an official channel if a full plan is not ready yet, using the correct payment reference.
- Keep filing and record-keeping moving so the next bill is based on accurate figures.
If the underlying return still needs preparing, TaxSimba’s Self Assessment service is accountant-led from the records you supply. We cannot promise that HMRC will accept a particular payment plan, waive interest, or cancel penalties. Payment arrangements are between you and HMRC on GOV.UK’s terms.
Prepare a realistic affordability schedule
Illustrative preparation example.
Write down the HMRC balance, other debts, essential household costs and a monthly amount you can maintain. Distinguish a proposed payment from a plan HMRC has accepted. Keep filing work moving while discussing the debt.
Check: What payment can you sustain, and where is HMRC’s confirmation of the arrangement?
| Check | Practical action |
|---|---|
| Is the tax overdue or still ahead? | Use the appropriate official payment-plan or advance-budgeting route for your position. |
| Can you evidence an affordable amount? | Prepare income, essential spending, assets and other tax debts before contacting HMRC. |
| Is the return still outstanding? | Progress filing separately so payment difficulties do not create an avoidable filing problem. |
Does paying something mean HMRC accepted a plan?
No. A payment reduces the balance but does not itself establish an instalment arrangement. Retain the confirmation and terms of any agreed plan.
Can reducing payments on account fix every unpaid bill?
No. A reduction needs a supported lower-liability estimate. It does not erase balancing tax already due or replace a payment arrangement.
Download a checklist for this guide
- Download the current balance and due dates.
- Separate tax, advance payments, interest and penalties.
- Prepare an honest affordability summary.
- Use the official HMRC route and record agreed terms.
- Keep filing and future tax budgeting on track.