HMRC Time to Pay Arrangement UK 2026: Settle Tax Debt in Instalments

If you owe HMRC and cannot pay in full by the deadline, the Time to Pay arrangement lets you spread the debt across monthly instalments. It's the official mechanism HMRC offers to taxpayers in genuine financial difficulty - interest still accrues, but you avoid the harshest enforcement actions (debt collection, attachment of earnings, court action).

This guide explains who can use it, how to apply, and the traps to avoid.

What Time to Pay actually is

A Time to Pay (TTP) arrangement is a contract between you and HMRC where:

• You agree to pay your outstanding tax debt in monthly instalments.
• HMRC agrees not to pursue further enforcement (debt collection, court, attachment of earnings) while you're meeting the instalments.
• Interest continues to accrue at the HMRC rate (currently 8% above the Bank of England base rate).
• Late-payment penalties already applied stay in place; new penalties may pause if you stick to the plan.
• Missing an instalment voids the arrangement and triggers immediate full demand.

It's not debt forgiveness. It's a payment plan. You still owe everything you owed before, plus interest until the balance is cleared.

Who can use it

The eligibility rules differ by tax type:

Self Assessment online tool (the easiest route)

You can use HMRC's automated online TTP tool if all of these are true:

• You owe under £30,000 in Self Assessment.
• You're no more than 60 days past the payment deadline.
• You don't have other outstanding tax debts or current TTP arrangements.
• You filed your Self Assessment return on time.

Up to 12 monthly instalments. Approved instantly online. Requires Direct Debit.

PAYE / VAT / Corporation Tax / older Self Assessment debts

For these, you can't use the online tool - you must phone HMRC. The relevant numbers:

• Self Assessment payment helpline: 0300 200 3822 (for SA debts not eligible for online TTP)
• Business Payment Support Service: 0300 200 3835 (for businesses with VAT, PAYE, CT debts)
• Tax Credits debt helpline: 0345 302 1429
• Universal Credit overpayment line: 0800 916 0647

HMRC's case-handling team assesses your means. They may ask for:

• Income and expenditure breakdown.
• Bank statements (last 3 months).
• Details of other debts.
• Reasons for non-payment.

The agreed plan length depends on the size of the debt and your ability to pay. Plans of 12-24 months are typical for Self Assessment; longer plans (36-60+ months) for larger commercial debts.

What information HMRC needs

Whether online or by phone, have ready:

• Your National Insurance number (or Unique Taxpayer Reference for Self Assessment, or PAYE reference for employer debts).
• The amount you owe and the tax year(s) it relates to.
• Your monthly net income after tax.
• Your monthly essential expenditure (rent/mortgage, utilities, food, transport, childcare, debt repayments to others).
• A realistic monthly amount you can afford to pay HMRC.
• Bank account details for the Direct Debit mandate.

HMRC's principle: you should pay everything you can afford after meeting essential living costs. They don't expect you to default on your mortgage or fail to feed your family - but they also don't accept "I can't afford anything" without evidence.

The interest cost

Interest on TTP arrangements accrues at HMRC's published rate, currently 8% above the Bank of England base rate (so around 12-13% in 2026 depending on base rate movements).

This is materially higher than most personal loan rates. For commercial debts, it's higher than typical business overdraft rates.

If you have access to a low-interest borrowing source (e.g. a 0% credit card transfer, a director's loan, or a low-rate family loan), it may be cheaper to borrow to pay HMRC in full and then repay the borrowing at a lower rate. Run the maths.

What happens if you miss an instalment

Missing a payment voids the TTP arrangement immediately. HMRC then has the right to:

• Demand the full outstanding balance immediately.
• Apply late-payment penalties to the unpaid amount.
• Pursue debt collection through external agencies (Bristow & Sutor, Marston, etc.).
• Apply to the County Court for a judgment.
• Apply to the magistrates' court for a Liability Order.
• Use direct deduction from earnings (DDO) via your employer's payroll.
• For self-employed traders: enforcement against business assets.

Communicate IMMEDIATELY if you anticipate a miss. HMRC will sometimes adjust the instalment amount before a default if you're proactive - they will rarely re-establish a TTP after a default.

When to call vs use the online tool

Use the online tool if you tick every box for the simplified Self Assessment eligibility (under £30k, within 60 days, no other arrangements). It's instant, anonymous, and doesn't involve a phone call.

Call HMRC if:

• The debt is over £30,000.
• The debt is older than 60 days past deadline.
• The debt isn't Self Assessment.
• You have multiple tax debts that need bundling.
• Your income/expenditure shows you can't afford 12-month repayment and need a longer plan.
• You're a business with cashflow issues affecting VAT/PAYE/CT obligations.

Be prepared for a 30-60 minute call.

Tactical tips

1. Apply BEFORE the deadline if you can. TTP applications made before the payment due date avoid the late-payment penalty (though interest still accrues from the due date).
2. Don't agree to an instalment you can't afford. A defaulted TTP is worse than no TTP. Be honest about what you can pay.
3. Keep a buffer. If you can pay £400/month comfortably, propose £350. Leaves room for an emergency without missing a TTP instalment.
4. Document everything. Keep a record of every call (date, time, agent name, outcome) and confirm in writing where possible via your HMRC online account journal.
5. Update HMRC if circumstances change. A pay rise should be reported (HMRC may want to accelerate); a pay cut may justify renegotiation.

When TTP isn't enough

If even the most generous TTP arrangement is unaffordable, you may need:

• Insolvency advice: a Debt Relief Order (DRO), Individual Voluntary Arrangement (IVA), or Bankruptcy can include HMRC debts. This has serious credit-file consequences but can give you a fresh start.
• Specialist debt charities: StepChange (0800 138 1111), National Debtline (0808 808 4000), Citizens Advice. All free, all impartial, all FCA-regulated.

Avoid commercial "debt management" companies that charge fees - the same advice is available free elsewhere.

Disclaimer

PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated debt or insolvency advice. HMRC tax debts can have severe enforcement consequences; for substantial debts or where insolvency is on the horizon, consult a debt charity (StepChange, National Debtline, Citizens Advice) or a licensed Insolvency Practitioner.