How to set up a payment plan with HMRC.

If you’ve received a tax bill and you’re worried you can’t pay it in full, you’re not alone.

The most important thing is this: don’t ignore it. It can feel difficult to deal with, but not doing anything usually makes it worse. And there is help for you.

HMRC will usually agree to a payment plan if you get in touch early and make a realistic offer.

Here’s how it works.

Contact HMRC as soon as you can.

If your tax is due under Self Assessment, you may be able to set up a payment plan online.

You can do this if:

You owe less than £30,000

All your tax returns are up to date

You don’t have other overdue tax debts

It’s within 60 days of the payment deadline

There’s more information about setting up a payment plan on the HMRC website.

If you don’t meet those conditions, or you’d rather speak to someone, call HMRC on 0300 200 3820.

It’s always better to contact them before the debt gets bigger.

HMRC’s Extra Support Team.

If you have a health problem or you are struggling with something, then HMRC’s Extra Support Team may be able to help you.

They are there for you if you:

Can’t read or understand the forms

Have a disability

Have a learning difficulty

Have a mental health problem

Can’t afford food, bills, or rent

Have an unsafe home due to abuse

Are not allowed to use your own money (this could be financial abuse)

Are in the hospital for a health issue

Find out more about the HMRC Extra Support team.

Be ready with the right information.

To set up a payment plan, HMRC will want to understand what you can realistically afford.

They’ll ask for:

Your reference number (usually your UTR or a number from an HMRC letter)

Details of the tax you’ve missed or can’t pay

Your bank details (the plan is set up by direct debit)

Your monthly income from all sources

Your regular living costs

Details of savings or assets

They won’t ask you to sell your home or for money from your pension. But if you have savings, they will expect you to use some.

How HMRC decides what you pay.

HMRC works out what’s left after essential living costs (your disposable income). They’ll usually expect up to 50% of that amount to go towards your tax debt.

You can offer more if you want to clear it faster, but only offer what you can genuinely afford.

If you’ve completed a Standard Financial Statement with Citizens Advice or another debt adviser, HMRC will normally accept it.

They don’t usually ask for proof of income or spending, but it’s important to be honest. If information is missing or inaccurate, they can cancel the plan.

How long can a payment plan last?

Most plans last around 12 months.

They can be longer. Two or three years is possible if that’s what you need and you can show it’s affordable.

If you can pay a lump sum upfront, that will reduce the amount covered by the plan.

The arrangement must cover:

All tax currently due

Any payments on account becoming due

Any other tax you know about

Interest will still be added to payments made after the normal due date.

What to do if your situation changes.

If your income goes up or down, tell HMRC.

They can:

Extend the plan if money is tighter

Shorten it if you’re able to pay more

If you think you’ll miss a payment, contact them before it happens. It’s much easier to fix problems early.

What if HMRC says no?

HMRC have consider your request, but they don’t have to agree.

If they refuse, you can’t formally appeal the decision. But you can make a complaint and ask for the case to be reviewed. If you’re still unhappy, you can ask for it to go to the Adjudicator’s Office.

Can collection action be paused?

Sometimes.

If you’re selling an asset to pay the debt, or there’s a genuine dispute about the amount owed, HMRC may temporarily pause recovery action.

Interest will still build up while the tax remains unpaid.

What if you have no way to pay?

In very rare cases, where someone has very low income, no savings, and no realistic prospect of paying now or in the future, HMRC may decide not to pursue the debt.

This isn’t common. But if your circumstances are severe, it’s important to explain them fully.

What happens if you don’t contact HMRC?

If you don’t tell them, HMRC won’t know you’re struggling.

They may assume you’re refusing to pay. That can lead to enforcement action.

It’s always better to speak to them first.