Can’t pay what you owe by 31 January 2026?

If you can’t pay your tax bill by 31 January, try not to panic. There are steps you may be able to take.

It is important you don’t ignore the situation. If no action is taken, HMRC will charge late payment penalties from 3 March 2026. Late payment interest will also be charged for any late payments made.

  Even if you cannot pay what you owe, you should still submit your 2024/25 tax return by the deadline. Failing to file on time will trigger late filing penalties, which can make the situation worse.

Review your tax liability

First things first, you should make sure you are claiming all the reliefs and allowances that you are entitled to, to ensure you are only paying the right amount of tax.

For example:

• Are you able to benefit from the marriage allowance?
• If you are employed or self-employed, you should check that your tax calculation includes any allowable outgoings that may reduce your overall tax liability, for example unreimbursed employment expenses.
• If you pay tax at above the basic rate, ensure that any pension contributions and gift aid donations you have made in the year are also included as you may be due some additional tax relief.

Ensure you take account of all tax already paid

Sometimes you might have already paid some tax towards your final bill for the year. Is this reflected in your calculation? It is a good idea to check.

Tax deducted at source

Although you may be required to complete a tax return because you have income that has not been taxed at source, it is important to remember that a tax return is a full reconciliation of your tax position.

This means it must include:

• income that has already been taxed at source (for example, PAYE income), as well as
• untaxed income.

If tax has already been deducted at source from any income, make sure this is included in your tax return, and correctly shown on the tax computation, reducing the final amount you owe for the year.

Payments on account

If your self assessment tax bill was more than £1,000 last year, you may have had to make payments on account towards your 2024/25 tax liability. You can read our recent article explaining more about payments on account and when they apply, for more information.

  If you have made payments on account for 2024/25, these will not be reflected in the initial HMRC calculation shown when you file your 2024/25 self assessment tax return. The system needs time to process the actual 2024/25 liability shown on your tax return and reconcile it with the advance payments you have already made. Your account will eventually be updated, but in the meantime, will have to do this bit of maths yourself. 

Can you reduce/remove payments on account?

The amount you are asked to pay on 31 January may include payments on account for the current tax year (2025/26). If you think your tax liability for 2025/26 will be lower due to a change of circumstances, such as no longer being self-employed or reduced income, then you can ask HMRC to remove or reduce the payment on account. You can read more about how payments on account work in our website guidance.

  Be careful not to reduce your payments on account by too much. You can read our recent article explaining more about payments on account and reducing them, for more information on the consequences.

Time to Pay arrangement

If you feel that you cannot afford to pay everything at once by 31 January, then you might be able to set up a Time to Pay instalment arrangement online, depending on how much you owe and your circumstances. As it is automated this means you do not have to speak to anyone from HMRC to arrange it.

If you can’t use the online facility, contact HMRC by phone as soon as possible to tell them that you can’t pay. Note that a Time to Pay arrangement cannot be set up until you have submitted your tax return. You can find more information on our website.

  It is important that anyone who is considering entering into a Time to Pay arrangement with HMRC, understands that late payment interest will still be charged and the impact that it may have on the overall amount owed. The interest may be high, or at least higher than you were expecting, and it may now be a more significant consideration, although HMRC’s rates may be lower than other creditors.

Other options

If you have further worries about tax debt, the charity TaxAid have a guide that might help you understand your options.

If you are in serious debt and feel overwhelmed or at crisis point, we recommend you consider taking further advice from a debt specialist, such as Citizens Advice, StepChange or Business Debt Line. In some cases, debt advisers can help you access a scheme called Breathing Space. This scheme covers HMRC debts and can provide legal protection from creditor action for 60 days, to relieve pressure and to give you a chance to consider other debt solution options with a debt specialist.