Inflation is at its highest level in ten years, and the resulting cost of living crisis may make it hard for many people to pay the taxes they owe. What can you do about it if this is you?
It might be tempting to stick your head in the sand and hope the bill will go away on its own, but this is a bad idea. In this case, ignoring the problem will make it worse. HMRC will eventually want their money, and they have a number of tools they can use to get it.
It is much better to take charge of the situation. You might not have to pay everything at once. Instead, you might be able to pay in smaller amounts over time.
Set up an online plan
If you can’t pay your self-assessment tax bill all at once, you may be able to set up a payment plan online. This is called a “Time to Pay arrangement.” You will need to sign in to your Government Gateway account to do this.
You can set up a Time to Pay agreement online if:
- You have sent in your most recent tax return,
- you owe less than £30,000,
- you have less than 60 days to pay, and
- you plan to pay off your debt in the next year or less.
If you can’t set up an instalment payment plan online, for example because you owe more than £30,000 in tax or need more time to pay, you can call HMRC’s Self-Assessment helpline to see if you can agree to one over the phone. The number to call for help with Self-Assessment Payment is 0300 200 3822. Monday through Friday, 8 a.m. to 6 p.m., the helpline is open.
What you need to know
To set up a Time to Pay arrangement, you’ll need certain things, such as:
- your unique tax reference number (UTR),
- information about your bank account, and
- information about any missed payments.
HMRC will ask you if you can pay in full (if you can, they will expect you to), how much you can pay back each month, if you owe other taxes, how much you make, what your monthly expenses are, and what savings and investments you have. HMRC expects you to use any assets or savings you have to pay any taxes you owe.
Follow the plan
Once you agree to a Time to Pay arrangement, it is important to make payments according to the plan. If you miss a payment, HMRC will usually contact you to find out why and, if possible, will bring the plan back. But if you keep making mistakes, HMRC will try to get the full amount back.
If you get more tax bills you can’t pay, you might be able to change the plan to include them.