Let’s be honest. Looking at a tax bill when the cash flow just isn’t there is one of the most stressful parts of running a business.
Whether it is rising costs or a client who hasn’t paid you on time, sometimes the numbers just don’t add up by the deadline. If you are in this boat, don’t bury your head in the sand. HMRC would much rather talk to you now than send the bailiffs round later.
Their Time to Pay scheme is designed exactly for this situation. Here is the dead simple guide to how it works and how to get it set up.
What Actually Is Time to Pay?
It does exactly what it says on the tin. It is an agreement with HMRC that lets you spread your tax bill over manageable monthly instalments.
Important: This is not a tax write-off. You still owe the full amount. The scheme just gives you a bit of breathing room to pay it off without destroying your cash flow.
What Taxes Can I Include?
You can usually set up a payment plan for the big ones, including:
- VAT
- PAYE and National Insurance (for employers)
- Corporation Tax
- Self Assessment
- Penalties or interest you already owe
If you have a few different tax debts piling up, you can sometimes bundle them all into one monthly payment to keep things tidy.
Can I Set It Up Online?
Yes, and this is usually the quickest way to get it sorted.
HMRC has pushed hard for digital services. As of December 2025, you can usually set up a plan online without speaking to anyone if:
- For Businesses: You owe less than £100,000.
- For Individuals (Self Assessment): You owe less than £30,000.
You need to have filed your tax returns first (HMRC won’t agree to a plan if they don’t know exactly what you owe). If you owe more than these limits, you will have to pick up the phone and speak to an adviser to negotiate.
How Long Do I Get?
Usually, HMRC expects you to clear the debt within 12 months.
Can you get longer? Sometimes. But you will need to provide strong evidence that you physically cannot pay it faster. They will want to see cash flow forecasts and a detailed breakdown of your income and spending. In our experience, offering to pay it off as fast as realistically possible is the best way to get a “yes”.
The Catch: Interest and Penalties
There is no such thing as a free loan.
- Interest: Yes, HMRC will charge interest on the unpaid tax for the duration of the plan. You will end up paying a bit more than the original bill, but it is cheaper than a bank loan or overdraft in most cases.
- Penalties: If you agree to the plan before the payment deadline, you can usually avoid late payment penalties.
The Golden Rule: Don’t Ghost Them
Once you have a Time to Pay arrangement, stick to it.
If you miss a monthly payment, the deal is usually void. HMRC can cancel the arrangement and demand the full amount immediately.
Also, you must keep on top of your new tax bills while paying off the old one. If you fall behind on a new VAT return while paying off an old Corporation Tax bill, the whole house of cards can fall down.
Need a Hand?
If the thought of negotiating with HMRC makes you feel ill, or if your situation is complicated (like owing multiple taxes at once), we can help.
We speak to HMRC every day. We can help you work out a realistic repayment figure and put your case forward to get the best possible arrangement.
Get in touch with us today. Let’s get it sorted so you can sleep eas
