What is an HMRC Time to Pay arrangement and how does it work?

With HMRC's late payment interest rate at 7.75% (from 9 January 2026), missing a tax deadline now costs more than ever. For UK businesses and self-employed taxpayers struggling with cashflow, an HMRC Time to Pay arrangement (TTP) allows tax debt to be spread into monthly instalments instead of paid as a lump sum. This guide covers who qualifies, how to apply online or by phone, the interest still due, and what happens if a payment is missed.

What is an HMRC Time to Pay arrangement?

An HMRC Time to Pay arrangement (TTP) is a legal payment plan that allows taxpayers to pay outstanding tax liabilities in instalments over an agreed period of time.

UK guidance explains that HMRC may agree to a payment arrangement when a taxpayer is experiencing temporary financial difficulties but is still considered capable of repaying the debt over time.

Which taxes can be included in a Time to Pay arrangement?

An HMRC TTP arrangement may apply to several taxes. HMRC may agree to a Time to Pay arrangement for taxpayers and businesses experiencing temporary difficulties paying tax bills. The type of tax involved can affect how the arrangement is requested and whether taxpayers can apply online or need to contact HMRC directly. 

How long can HMRC give taxpayers to pay?

The repayment period depends on the taxpayer’s circumstances, the amount owed, and HMRC’s assessment of affordability. Some arrangements may last only a few months, while larger debts may be spread over longer periods. HMRC generally expects taxpayers to pay as quickly as reasonably possible while maintaining realistic monthly instalments. 

Who can apply for an HMRC Time to Pay arrangement?

Businesses and individuals may apply for an HMRC Time to Pay arrangement if they cannot pay their tax bill in full by the deadline. HMRC will usually assess whether the taxpayer is experiencing temporary financial difficulties, whether they can afford the proposed repayments, and whether they are likely to meet future tax obligations while keeping up with the arrangement. 

HMRC Time to Pay arrangement for Self Assessment

A self-employed taxpayer can apply for a Time to Pay arrangement on their Self Assessment bill if they cannot pay by the due date. Missing the deadline without setting one up triggers interest at 7.75% and may also lead to late payment penalties.

Time to Pay arrangement for Corporation Tax

Limited companies experiencing cashflow difficulties can request a Time to Pay arrangement on their Corporation Tax liability.

There is no online self-serve option for Corporation Tax. Companies must contact HMRC's Business Payment Support Service directly.

HMRC will usually request:

• a brief cashflow forecast covering the proposed repayment period;

• recent bank statements;

• details of any other HMRC debts or active arrangements.

A Corporation Tax TTP does not waive late filing penalties on the CT600 itself; those remain payable separately if the return is filed late.

How do you arrange Time to Pay HMRC?

Taxpayers can arrange Time to Pay HMRC either online or by contacting HMRC directly, depending on the type of tax and the circumstances involved. The application process usually requires taxpayers to explain why they cannot pay immediately and how they intend to repay the debt.

HMRC Time to Pay arrangement online

In line with UK government guidance, some taxpayers can set up an HMRC Time to Pay arrangement online through their HMRC account. This option is commonly available for eligible Self Assessment debts and may allow taxpayers to create instalment plans without speaking directly to HMRC. To apply for an HMRC Time to Pay arrangement online, taxpayers generally need their Government Gateway login details, the amount owed, and details about how much they can afford to repay each month.

Self Assessment taxpayers can set up a Time to Pay arrangement online without speaking to HMRC if they owe less than £30,000, are within 60 days of the payment deadline, have filed all returns, and have no other HMRC debts or active payment plans. The plan can spread payments over up to 12 months.

How to contact HMRC for a Time to Pay arrangement

Where the online option is not available, taxpayers should call HMRC's Payment Support Service on 0300 200 3835 (Monday–Friday, 8am–6pm). The line handles requests across Self Assessment, VAT, Corporation Tax, and PAYE. HMRC will typically ask about the taxpayer's income and outgoings, recent bank balances, and how the arrangement will be funded before agreeing instalments.

Does HMRC charge interest on Time to Pay arrangements?

HMRC normally charges interest on unpaid tax balances during a Time to Pay arrangement. Although the arrangement may prevent further enforcement action, taxpayers will usually still need to pay late payment interest until the debt is cleared.

How is the interest calculated?

Interest is generally calculated daily based on the outstanding balance and HMRC’s current late payment interest rate. As stated in the UK Government guidance, the total amount paid may therefore increase depending on:

• the length of the repayment period;

• the size of the tax debt;

• any missed instalments.

As of 9 January 2026, HMRC's late payment interest rate is 7.75% per year, calculated daily on the outstanding balance (GOV.UK).

How to avoid penalties that might apply?

Businesses can reduce the risk of HMRC fines and penalties by submitting accurate tax information, keeping payroll and financial records up to date, checking calculations carefully, and ensuring HMRC deadlines are not missed. Staying informed about changes to payroll and tax legislation may also help businesses avoid filing errors and late submission penalties.

Warning: Failing to keep up with payments under a Time to Pay arrangement could result in additional interest charges and HMRC taking further action to recover the debt. Depending on the circumstances, HMRC may use debt collection agencies, take control of goods, or begin legal proceedings to recover unpaid tax.

What happens if you miss payments under an HMRC TTP agreement?

Missing payments under an HMRC TTP agreement can lead to the arrangement being cancelled and further recovery action being taken. HMRC will contact you in case of a missing tax payment.

Possible consequences of missed instalments

If you do not contact HMRC or refuse to pay, HMRC may take further action to recover the debt. Depending on the circumstances, this could include using a debt collection agency, recovering money directly from wages or bank accounts, taking control of and selling assets, starting court proceedings, making an individual bankrupt, or seeking to wind up a company where the debt relates to business taxes.

What should taxpayers do if circumstances change?

If financial circumstances worsen, taxpayers should contact HMRC immediately instead of ignoring the issue. HMRC may sometimes agree to revise the arrangement where there is evidence of genuine financial hardship and continued cooperation. HMRC may take further action to recover unpaid tax if the debt remains outstanding and no payment arrangement has been agreed.

What are the best practices when requesting a Time to Pay arrangement with HMRC?

Preparing properly before contacting HMRC can improve the chances of securing a manageable payment arrangement. Taxpayers should ensure they understand their financial position and propose realistic repayment terms.

How can businesses avoid future tax payment problems?

Businesses experiencing difficulties paying their tax bill on time should contact HMRC as soon as possible to discuss their circumstances.

HMRC may ask company directors to:

• inject personal funds into the business;

• take on additional borrowing;

• negotiate extended credit terms with suppliers.

Information to prepare before contacting HMRC

Before approving a payment arrangement, HMRC will assess whether the taxpayer has the means to pay and review specific information about assets, liabilities, and income. The taxpayer should be prepared to discuss their financial circumstances.

An HMRC Time to Pay arrangement can provide valuable short-term support for businesses and individuals facing temporary financial difficulties. However, these agreements should be treated carefully, as interest continues to apply and missed instalments can lead to serious enforcement action.

Taxpayers should contact HMRC as early as possible, provide accurate financial information, and ensure repayment proposals are realistic and sustainable. The earlier HMRC is contacted, the more flexibility there usually is on instalment length and the lower the risk of enforcement action.

📌 Example: A small business has £1,000 remaining each month after covering essential outgoings. When assessing affordability, HMRC typically expects the business to use around half of any disposable income towards its tax debt, meaning monthly instalments of around £500 would be considered reasonable.

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