Are you worried about making your Self Assessment payment at the end of this month?

Published on 27 January 2020

If you have a Self Assessment payment due to HMRC at the end of this month and you can’t afford to pay it, then you now have the option of making a payment arrangement without having to speak to anyone at HMRC.

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©shutterstock/Georgijevic

HMRC have a new online service which means you can now apply to set up a Self Assessment payment plan online (officially called a Time to Pay arrangement). Once a time to pay arrangement is agreed, it allows you to pay what you owe in instalments, rather than all in one go. The instalments must be made by Direct Debit under this plan.

If you agree an instalment plan with HMRC then you should not be charged any late payment penalties or surcharges from the time that the agreement is in place, provided you keep to the arrangement.

It is really important that you don’t fall into the trap of not submitting your tax return by the deadline of 31 January 2020 because you know you will have a substantial tax bill that you can’t afford to pay. This is because if you do not file your return, you may be liable for late filing penalties, on top of what you owe.

Instead, you can consider setting up a payment plan – if you use the new online service you can do this without having to speak with anyone in HMRC as long as you meet certain conditions.

As part of the online application, you will be asked:

  • Whether you can afford to pay anything up front
  • How much you can afford to pay each month (note, you are not asked for income or expenditure details)
  • How many months you want to pay over (maximum 12 – see below)
  • Which day of the month you want to pay each month

To set up a payment plan online, you need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you set up a payment plan.

You will only be able to use this service once you have missed the payment deadline – to make a payment arrangement before the 31 January deadline, call HMRC’s Payment Support Service to discuss the possibility of a Time to Pay arrangement. You can find out more about preparing for this call in the GOV.UK guidance.

The criteria to use the online service are that you must:

  • be seeking to pay a Self Assessment debt only (which can include payments on account)
  • owe £10,000 or less
  • have no other tax debts
  • have no other ongoing HMRC payment plans
  • be a month or less late in paying (this would give you until the end of February 2020, in respect of a 2018/19 tax return bill, due on 31 January 2020).

Also, currently HMRC only agree online payment arrangements up to a maximum of 12 months. So if you need more than 12 months to pay, you should contact HMRC to discuss your position, including your income, expenditure and asset position, in more detail:

Self Assessment Payment Helpline
Telephone: 0300 200 3822
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm
Find out about call charges

Guidance on the information that you should have to hand before calling, can be found on GOV.UK.

Note that HMRC’s Extra Support team can deal with tax debt issues for vulnerable taxpayers. So if you phone HMRC and explain your circumstances, you may be passed to this specialist team to be dealt with.

Two important things to note

There is no maximum time limit for a payment arrangement to be agreed (except if it is made online – the limit is 12 months) as HMRC will consider each case individually. You should be aware that interest (currently 3.25% per annum) will apply to any payment arrangement made, so the longer the arrangement, the more interest you will pay.

If an agreement is made, whether online or otherwise, it is very important that you meet these payments in full and on time, otherwise HMRC could cancel the arrangement and the full amount of the outstanding debt could become due again. If you think you will have trouble meeting an instalment due under a Time to Pay arrangement you should contact HMRC to explain why you can’t meet the instalment and try to renegotiate the arrangement.

Further information

HMRC have recently issued some detailed guidance about their approach to setting up a time to pay arrangement – this includes an example of the form that they use to gather information. 

Need more help?

If you do not think you will be able to pay what you owe, no matter how long you are given, or you feel you are at crisis point with your tax debt and are on a low income, then you should seek advice from TaxAid, as we explain in our tax debt guidance.

(27-01-2020)

Contact: Meredith McCammond (please use form at Contact Us) or follow us on Twitter: @litrgnews