Can I get a Time to Pay arrangement with HM Revenue and Customs?

A Time to Pay arrangement lets a business pay a tax debt it cannot pay on time in instalments, with interest at the late payment rate, 7.75% a year since 9 January 2026. You can set one up online for a Self Assessment debt of £30,000 or less; for other debts HM Revenue and Customs checks what you can afford before it agrees.

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How a Time to Pay arrangement works

If the business cannot pay a tax bill in full, it can ask HM Revenue and Customs to let it pay in instalments, by Direct Debit. HM Revenue and Customs checks whether the plan is affordable. If it agrees, interest runs on the balance until it is paid. If no plan is agreed, it asks for the full amount.

Online services let you check whether a debt qualifies and set a plan up without calling. For Self Assessment the online limit is £30,000, and you must be up to date with your returns, have no other tax debts or payment plans, and be able to set up the Direct Debit on your own. For other taxes and larger debts, the online service tells you whether the debt qualifies, and if it does not you call the payment support line.

Ask early. For VAT, asking for a plan by day 15 after the due date can avoid the first late payment penalty. Asking by day 30 avoids the higher penalties that start at day 31, though the first penalty of 3% still applies.

Time to Pay in figures

£30,000Self Assessment debt you can set up a plan for online
7.75%Late payment interest a year, from 9 January 2026
Base rate + 4%How the late payment rate is set, from 6 April 2025
3% + 3%First VAT late payment penalty: at day 15, and again at day 30

Source: gov.uk and tax.service.gov.uk, checked 3 November 2026.

A person signing a document at a desk

What HM Revenue and Customs asks for

Expect questions about whether you can pay in full, how much you can pay each month, your income and spending, your savings and investments, and any other tax you owe. For a company it asks for the company’s income and spending. You will be asked to pay about half of what is left after essential outgoings each month.

A company is expected to reduce the debt as far as it can before a plan is agreed, for example by releasing stock, vehicles or shares, and its directors may be asked to put in personal funds, take on borrowing or extend credit to the company. Have a cash flow forecast ready that shows the instalments alongside the tax that will fall due while the plan runs.

Interest on a £40,000 VAT bill over 12 months

Illustrative example

A company owes £40,000 of VAT and agrees to pay it in 12 equal monthly instalments of £3,333.33, with late payment interest at 7.75% a year on the balance. Approximate: interest runs daily from the due date.

Balances outstanding across the 12 months, added up
£260,000
Average balance over the year (£260,000 ÷ 12)
£21,666.67
Interest at 7.75% on the average balance for a year
£1,679.17
Approximate interest over the plan
£1,679.17

Time to Pay or a loan

Time to Pay arrangementA loan to pay the bill
Who decidesHM Revenue and Customs, on affordabilityThe lender, on its criteria
RateLate payment interest, base rate plus 4%, which moves with base rateSet by the lender, fixed or variable
Cost on £40,000 over 12 monthsAbout £1,679 at 7.75%£2,423 interest at an assumed 11%, plus an assumed 2% fee of £800: £3,223
What is asked forIncome, spending, savings, assets and directors’ fundsAccounts, bank statements and credit files
Tax positionThe debt stays owed to HM Revenue and Customs until the last instalmentThe tax is paid on time; the debt is owed to the lender
On insolvencyVAT and payroll taxes rank as secondary preferentialAs the loan’s security sets

Choosing between them

Put both in pounds. In the example the arrangement costs less than the loan at the assumed rate and fee. The result changes with the lender’s rate, with base rate, and with how long each runs, so work your own figures through the tax bill funding calculator.

Cost is one factor. A Time to Pay arrangement depends on HM Revenue and Customs agreeing, and it asks the company to use what it has first. A loan pays the tax on time, keeps the account with HM Revenue and Customs clear, and lets you plan the repayments around your own cash flow. VAT loans and corporation tax loans are built for this, with repayments spread over the months to the next bill.

If the tax bill is late because the business is short of cash every quarter, fix the cause as well. Why a profitable business runs short of cash covers the cash cycle and VAT cash accounting.

VAT and tax bill funding calculator

The monthly payment and total cost of funding a VAT or corporation tax bill over a few months.

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Questions people ask

How long can a Time to Pay arrangement last?

HM Revenue and Customs sets the length from how much you owe and what you can afford each month after essential outgoings. Paying the debt sooner means paying less interest in total. Online plans for Self Assessment cover debts of £30,000 or less; for larger debts you agree the length with HM Revenue and Customs by phone.

Do I pay interest on a Time to Pay arrangement?

Yes. Late payment interest runs on the balance until it is paid, at Bank of England base rate plus 4%, which has been 7.75% a year since 9 January 2026. The rate changes when base rate changes.

Can HM Revenue and Customs refuse a Time to Pay arrangement?

Yes. It checks whether the plan is affordable and whether the business has used what it can to reduce the debt first. If no plan is agreed, it asks for the full amount. Come with a forecast, a monthly figure you can keep to, and an explanation of why the bill could not be paid.

Will a payment plan stop VAT late payment penalties?

It can reduce them. Asking for a plan by day 15 after the due date can avoid the first late payment penalty. Asking by day 30 avoids the higher penalties from day 31, though the first penalty of 3% of the VAT outstanding at day 15 still applies. Interest runs either way.

Can I get a Time to Pay arrangement for corporation tax?

Yes, by contacting HM Revenue and Customs. It asks for the company’s income and spending, expects the company to reduce the debt as much as it can first, and may ask the directors to put in personal funds. Corporation tax for a company that is not large is due 9 months and 1 day after the end of the accounting period.

VAT loans

A VAT loan pays your VAT bill to HMRC on the due date, and you repay the lender in monthly instalments over a few months. It avoids HMRC’s late payment penalties and interest, at the cost of the lender’s interest and fees. HMRC may also agree a Time to Pay arrangement, which charges interest but no loan fees. The full answer.

Corporation tax loans

A corporation tax loan pays your company’s corporation tax to HMRC on the due date, and you repay the lender monthly over the following months. A company with profits up to £1.5 million pays its corporation tax nine months and one day after the end of the accounting period, in one sum. Paying late costs interest at base rate plus 4%, and HMRC can agree a Time to Pay arrangement as an alternative to a loan. The full answer.

Why is my business profitable but short of cash?

Profit is counted when you invoice, and cash arrives when your customer pays. In between you pay wages, suppliers and the VAT on the invoice, so a growing business can make a profit every month and still run short of cash. The full answer.

What happens if my business cannot repay a loan?

Missed repayments put the loan into default. The lender can demand the whole balance, enforce its security, call on any personal guarantee and, if the company still cannot pay, use insolvency procedures. Talk to the lender before the first missed payment, and take advice from a licensed insolvency practitioner if the company cannot pay its debts as they fall due. The full answer.

Finance is subject to status and to the lender’s terms. A personal guarantee makes you liable for the company’s debt if it does not repay, and it can be enforced against your own assets, including your home. Nothing here is a personal recommendation.

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Funding searches run on Swoop’s platform. Swoop Finance Limited is a credit broker and not a lender, and is authorised and regulated by the Financial Conduct Authority (FRN 936513). Buzz Accounting Ltd introduces businesses to Swoop and may receive a fee from Swoop when funding is arranged. Business funding is separate from the financial advice Equity & General Financial Services Limited gives through this website. Finance is subject to status, and a lender may ask a director for a personal guarantee.

Cover for a personal guarantee

If a lender asks you to guarantee the company’s borrowing, our advisers can advise on life cover for that debt.

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