Agreeing a payment plan used to involve calling HMRC and convincing the officer that you were struggling to pay. Agreement was often made grudgingly.
This stance has softened in recent years and, sometimes, there is no need to make a call at all. However, you do need to action the payment plan within 60 days of the payment deadline for tax owed personally under Self-Assessment (i.e. before the end of March 2023).
Time to Pay arrangements are informal agreements between the taxpayer and HMRC in situations where the self-assessment tax bill or employers’ PAYE can’t be paid in full by the deadline. Instead, the Time to Pay arrangement allows the amount owing to be spread across monthly installments by direct debit.
You can often set up your Time to Pay arrangement online with no need to make a call. This will be possible if you:
- have filed your 2022 Tax Return;
- are within 60 days of the payment deadline;
- owe less than £30,000; and
- can pay in full within twelve months.
The Time to Pay arrangement is also available to Employers’ who are struggling to settle their PAYE contributions. The Employer must have
- submitted their PAYE and Construction Industry Scheme Returns due;
- are within 35 days of the payment deadline;
- owe less than £15,000; and
- can pay in full within six months.
Guidance on how to set up Time to Pay is available online.
Late payment interest will be charged, but no late payment penalties. As interest rates are steadily increasing (currently 6% but from 21 February 2023, at 6.5%) paying sooner rather than later is recommended wherever possible.
