'I can't afford to pay my tax bill, what help can I get from HMRC?'

Millions of people must complete their self-assessment tax return by 23:59 on 31 January or else face an automatic £100 fine.

Those who earned income over £1,000 through something other than PAYE work for the 2024/25 tax year will need to not only file their self-assessment tax return, but also pay their tax bill before the deadline.

Ideally, those affected will already have the necessary funds to pay the bill before the cut-off.

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But for those who don’t, there is help available.

People who are unable to pay their tax bill in full on 31 January may be able to set up a “Time to Pay” arrangement with HMRC online, allowing them to spread the cost over monthly instalments.

“Time to Pay” has already been used by nearly 18,000 taxpayers since 6 April 2025, HMRC says, giving taxpayers more breathing room by arranging regular payments that suit their own circumstances.

Here’s how the scheme works, and who can use it.

What is HMRC’s Time to Pay?

“Time to Pay” is a scheme run by HMRC that allows some Brits to pay their tax bill in regular instalments if they are unable to pay it in one lump sum on 31 January.

The amount of money you will be asked to pay each will be based on how much tax you owe, and how much disposable income you have each month.

HMRC says you will usually be asked to pay around half of your monthly disposable income towards the tax you owe.

While using a repayment plan can be a good option for taxpayers who are unable to gather the necessary funds before 31 January, you will be charged interest when you pay through “Time to Pay”.

You will be charged an interest rate of 2.75%, but this is lower than the late payment penalties and the late payment interest rate of 5%.

If you think you may need to use “Time to Pay”, you should contact HMRC as soon as possible.

How to apply for HMRC Time to Pay plan

You can apply for “Time to Pay” through an online portal on the government’s official website.

To set up a payment plan, you will need to have already filed your tax return, so make sure you do this before the 31 January self-assessment deadline.

To set up a payment plan, you will need your unique tax reference number and your bank details to set up a direct debit.

In the application process you will have to answer questions about your income and spending. The repayment plan usually lasts 12 months, but could be more or less depending on your circumstances.

If your unpaid tax bill is lower than £30,000 and you apply within 60 days of the 31 January payment deadline, the process should be relatively straightforward – you should not need to contact HMRC directly.

If your unpaid tax bill exceeds £30,000, you could still qualify for a payment plan, but you will need to contact HMRC directly.

HMRC can still reject your “Time to Pay” application for a number of reasons. You may be rejected if you have other outstanding debt with HMRC or if the taxman thinks you will not be able to keep up with the monthly repayments.

How much are late tax return and late payment penalties?

If you miss the tax return deadline, or owe outstanding tax to HMRC and you fail to pay by midnight on 31 January 2025, you will face hefty fees.

Late filing penalties

There is an automatic £100 fine if you miss the 31 January deadline, and penalties increase the longer it takes you to file your tax return.

After three months without completing your tax return, you will be charged £10 a day for 90 days, up to a maximum of £900, on top of the original fine.

After six months, a further penalty of 5% of the tax due or £300, whichever is highest, will be added on top of the previous fines.

After 12 months, it’s another 5% or £300, whichever is greater.

Late payment penalties

If you do not pay your tax bill on time before the 31 January deadline, you will have to pay penalties and extra interest to HMRC.

You will get penalties of 5% of the tax unpaid at 30 days, six months, and 12 months after the deadline.

You will also be charged 7.75% interest on the amount of tax you still owe to HMRC. To avoid late penalties, you should pay your tax bill or apply for “Time to Pay” as soon as possible.