Cannot pay your tax bill: how to set up an HMRC payment plan and what it checks

The tax bill lands and the money is not there — and the usual first reaction is the worst one: say nothing and wait. Yet payment plans exist, can often be set up online, and the earlier you raise it, the easier the terms.

What can be done?

If you cannot pay in full, you may be able to set up a payment plan and clear the debt in monthly instalments. HMRC checks whether a plan is affordable for you. If no plan is agreed, HMRC will ask for the full amount — so silence settles nothing.

What do you need to set one up online?

Three things: the reference number for the tax you cannot pay; a UK bank account you are authorised to use for Direct Debit; and details of your income and spending — your own, or the company's if it owes company tax. The online service checks whether you are eligible.

What if you cannot apply online?

Then contact HMRC. They will ask whether you can pay in full, how much you can repay monthly, whether you owe other taxes, what you earn, what you usually spend each month, and what savings or investments you hold. Worth preparing those figures before the call.

What does HMRC check?

First, savings and assets: you are expected to use them to reduce the debt as far as possible. Second, income and spending — and here is a useful detail: a Standard Financial Statement produced by independent debt advice, such as Citizens Advice, is accepted as evidence.

If the debt belongs to a company

The bar is higher. The proposal must be realistic and affordable, and the company must first reduce the debt itself — by selling stock, vehicles or shares, for example. Directors may be asked to contribute personal funds, accept lending, or extend credit to the company.

What if the bill is not overdue yet?

That is a different and easier case. If a Self Assessment bill is not yet overdue and you want to pay towards it gradually, a Budget Payment Plan may suit: it builds up credit against the coming bill. It is not for debt, but for people who find weekly or monthly saving easier.

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What if you disagree with the amount itself?

That is a different route and should not be confused with a payment plan. A plan is about how to pay what has been charged. An appeal is about the charge being wrong.

You can challenge the tax bill itself, a penalty for filing or paying late, and a refused claim for relief. For direct tax you usually have 30 days from the date of the decision letter, and the appeal must say what you disagree with and why.

One detail that matters when money is short: while the dispute is unresolved, payment of the bill or penalty may be delayed. So if you genuinely disagree, settle the amount first and negotiate instalments on whatever remains.

In short

A payment plan is a normal route, not an admission of defeat. Online you need the tax reference, a Direct Debit account and your income and spending figures. HMRC will count your savings and expect them used. Companies must first reduce the debt themselves. And if the deadline has not passed, saving ahead through a Budget Payment Plan beats negotiating a debt later.

Checked against GOV.UK on 27 October 2026.