Blog | by Josh Clarke | November 2026
What to Do If You Can’t Pay Your Self Assessment Tax Bill
Josh Clarke
If your Self Assessment tax bill is due on 31 January and you already know you can't pay it in full the worst thing to do is nothing. HMRC has a formal process for exactly this situation called Time to Pay, and in most cases you can set it up yourself online in a few minutes. Here's how it works, who qualifies, and what happens if you miss the deadline altogether.
When is the deadline and what exactly is due?
The deadline to file your 2025/26 Self Assessment return online and pay what you owe is 31 January 2027 (provided you are completing your tax return online). For many people that bill isn’t just last year’s tax: it can also include the first payment on account towards 2026/27, which is a common reason the January figure ends up bigger than people expect. We’ve covered the fuller calendar of Self Assessment and other deadlines directors and small business owners need to track in our Surrey business tax deadlines guide if you want the wider picture.
Nothing here changes if you genuinely can't pay. Filing on time and paying on time are two separate obligations with two separate penalty regimes, and the single most important thing to understand is that you should still file your return by 31 January even if you can't pay a penny of what's owed. The penalty for filing late starts immediately after the deadline, while the penalty for paying late only starts to bite a bit further down the line, which gives you room to sort out payment separately.
What happens if you just don't pay?
HMRC charges interest on the outstanding amount from 1 February, calculated daily, whether or not you've been in touch. On top of that, a late payment penalty of 5% of the unpaid tax can apply if the bill is still outstanding 30 days after the due date (which in practice means early March). Further 5% penalties apply at six months and again at twelve months if the debt still hasn't been cleared. Ignoring the bill is the most expensive option available to you because interest and penalties keep building whether or not you've made contact.
The better path, and the one HMRC actively wants you to take, is to get in touch before the deadline passes if you already know you'll struggle, or as soon as possible afterwards if the bill catches you out. HMRC's own guidance is explicit that a payment plan agreed in advance avoids the late payment penalty, even though interest still applies throughout.
How does HMRC's Time to Pay (TTP) scheme actually work?
If you owe £30,000 or less, you can normally set up a Time to Pay arrangement yourself online through your Government Gateway account, without speaking to anyone at HMRC. You'll need to have already filed your return, since the online service calculates your plan from the actual figure owed rather than an estimate. The plan lets you spread what you owe over monthly installments by Direct Debit, typically up to 12 months, with the exact length depending on how much you owe and what you can realistically afford.
If you owe more than £30,000, or the online service doesn't offer you suitable terms, you'll need to call HMRC directly to agree a plan. Be ready to explain your income, essential outgoings and what you can genuinely afford each month, since HMRC will want to see the plan is realistic before agreeing to it. Interest continues to accrue on the outstanding balance for the whole life of the plan, which is worth factoring in when you work out how much to offer: paying it off faster, if you can, costs you less overall.
Which route applies to you?
| Situation | Route | What you need |
|---|---|---|
| Owe £30,000 or less, return filed | Set up online via Government Gateway | Government Gateway login, filed return, Direct Debit details |
| Owe more than £30,000 | Call HMRC directly | Breakdown of income and outgoings, a realistic monthly offer |
| Already missed the deadline | Call HMRC as soon as possible | Same as above; interest and penalties may already be accruing |
What should you do if you think you'll struggle to pay in January?
If your bill is likely to be more than you can cover in one go it's worth doing these things well before 31 January rather than waiting for the deadline to arrive:
- File your return as early as you can, even if you won't pay straight away, so you're working from the real figure rather than an estimate.
- Work out what you can genuinely afford to pay monthly, based on your actual income and outgoings, not a figure you hope will be enough.
- Set up the payment plan online if you owe £30,000 or less, or call HMRC before the deadline if you owe more or expect to need a longer repayment period.
This is exactly the kind of thing we help clients plan for as part of their regular work with us. If we already prepare your return, working out a realistic Time to Pay figure and getting the plan set up correctly is part of your fixed monthly fee, not a separate piece of work you need to pay extra for.
Frequently Asked Questions.
No. Time to Pay is an arrangement directly with HMRC and isn't reported to credit reference agencies in the way a missed loan or credit card payment would be. However, if you default on payments without notifying them and your debt may be passed to third parties and your credit score may be effected at this point.
Need help?
If your January bill is bigger than you expected, or you'd like us to work out a realistic Time to Pay figure before you speak to HMRC, get in touch via our website. For clients whose returns we already prepare, this is part of your regular fixed monthly fee.
Book a free consultation: https://loveyouraccountants.com/contact.
Author
Josh Clarke
Josh is our Chief Operating Officer, overseeing operations to ensure a smooth, responsive and high-quality service. With a practical, clear approach...
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