HMRC launched the Time to Pay arrangement scheme to help individuals and businesses struggling to pay their tax bill on time. For example, if you’re approaching the Self Assessment tax deadline and think you will struggle to pay your tax bill, this sort of agreement may be able to help.
What is a Time to Pay (TTP) arrangement?
A Time to Pay arrangement is essentially a payment plan between you and HMRC, allowing you to make affordable monthly payments towards your tax bill if you can’t pay the full sum on time.
If you’re unable to meet your tax payment deadline, or think that you may struggle to do so, contact HMRC as soon as possible. The idea of it can seem overwhelming but nobody wants to see you suffer, and if setting up an arrangement means there’s a greater chance of the tax being paid, HMRC are likely to be open to it.
Will I have to pay interest?
Yes, HMRC will charge interest on the tax that you owe even if you set up a Time to Pay arrangement. Interest will start to accrue from the original payment deadline until the end of the arrangement.
How do I request a Time to Pay agreement?
If it’s for your Self Assessment tax bill you might be able to set up a Time to Pay plan online but only if it’s less than 60 days after the payment deadline and you:
- Have submitted your tax return
- Owe £30,000 or less
- Don’t currently have any other outstanding debts or payment plans with HMRC
For everything else you’ll need to contact HMRC and speak to an adviser. They’ll ask for the reference number relating to the bill you want to discuss and your (or your business’s) UTR number, so have these handy before the call.
How much will I have to pay?
The payment plan will be for the full amount you owe plus any interest, but the amount you pay for each instalment depends on what you or the business can realistically afford.
Individuals who request a payment plan won’t normally pay more than 50% of their disposable income, and HMRC will carry out an ‘income and expenditure’ assessment to work this out.
You’ll need to provide your personal details and those of any dependants, as well as information about your household income and spending each month.
How long can a Time to Pay arrangement be?
This depends on how much you owe, and what you or the business can reasonably afford to pay each month. These arrangements are intended to be flexible so the payment plan can be adapted if your circumstances change.
For instance, you might be able to make larger payments over a shorter period of time if your income increases, make a lump sum payment, or ask for more time if your expenses increase or income reduces.
Will my home be safe if I make a Time to Pay arrangement?
HMRC say that they won’t ask anyone to sell the family home in order to pay their tax bill though if you have other assets, such as a second home or savings, HMRC may discuss these with you. Your pension pot is also safe.
Learn more about our online accountancy services. Call 020 3355 4047, and get an instant online quote.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
