Receiving a Self Assessment tax bill can be stressful, especially when you do not have enough money available to pay it in full. Perhaps your business has had a quieter month than expected, a client has not paid an invoice, or unexpected household expenses have affected your budget. Whatever the reason, finding the money to pay HMRC can be difficult.

If you are facing this situation, the first thing to remember is that you should not ignore your tax bill. Leaving it until the last minute can make matters more complicated, particularly if interest and late payment penalties begin to apply.

The good news is that there are steps you can take. Depending on your circumstances, you may be able to arrange payments with HM Revenue and Customs (HMRC), spread the cost of your tax bill, or explore other ways to manage your tax payments.

This guide explains the options available if you are struggling to pay your Self Assessment tax bill, including how to spread your payments and manage your tax obligations without unnecessary stress.

What Is a Self Assessment Tax Bill?

Self Assessment is the system HMRC uses to collect Income Tax from people whose tax is not fully deducted through PAYE.

You may need to complete a Self Assessment tax return if you are self-employed, receive certain types of rental income, have taxable income from other sources, or meet another HMRC filing requirement.

After submitting your tax return, HMRC calculates how much tax you owe. Depending on your circumstances, your bill may include Income Tax, Capital Gains Tax, and National Insurance contributions where applicable.

For the 2025/26 tax year, the usual deadline for submitting an online Self Assessment tax return and paying the tax due is 31 January 2027.

However, your payment deadline may differ for certain liabilities. For example, payments on account are generally due on 31 January and 31 July, and some tax bills have different payment arrangements.

If you have received a bill that you cannot afford, it is important to understand exactly what you owe and when payment is due.

What Should You Do If You Cannot Afford Your Tax Bill?

Finding out that you cannot pay your tax bill in full can be worrying. However, taking action early can help you understand your options and avoid making the situation worse.

1. Do Not Ignore the Tax Bill

It can be tempting to put the letter aside and hope your financial situation improves. Unfortunately, ignoring HMRC correspondence will not make the amount you owe disappear.

If you miss the payment deadline, HMRC may charge interest on the unpaid tax. Late payment penalties can also apply under the relevant rules.

Instead, check your Self Assessment account or HMRC correspondence to confirm the outstanding amount, the payment deadline and whether any interest or penalties have already been added.

Having accurate figures will help you decide what you can realistically afford to pay.

2. Contact HMRC as Soon as Possible

If you know you will struggle to pay, consider contacting HMRC before the payment deadline.

Explain your situation honestly and be prepared to discuss your income, essential living costs, savings, other debts and the amount you can afford to pay.

HMRC may be able to discuss a payment arrangement based on your circumstances. However, approval is not automatic, and you should not assume that contacting HMRC alone stops interest or penalties.

If you have already missed the deadline, it is still worth taking action rather than waiting until the debt becomes more difficult to manage.

3. Check Whether You Can Pay in Instalments

One option may be a Time to Pay arrangement.

This allows eligible taxpayers to spread an outstanding tax bill over an agreed period instead of paying the full amount immediately.

For example, imagine your Self Assessment tax bill is £2,400, but you cannot afford to pay the entire amount at once. If HMRC agrees to a 12-month arrangement, the payments would average £200 per month before accounting for interest and any other applicable charges.

The actual repayment period and amount will depend on your circumstances and HMRC’s agreement.

You may be able to arrange payments online if you meet HMRC’s eligibility conditions. Otherwise, you may need to contact HMRC directly.

Before agreeing to a plan, make sure the monthly payments are affordable alongside your normal living expenses and other financial commitments.

How Does HMRC Time to Pay Work?

A Time to Pay arrangement is designed to help taxpayers repay tax they cannot afford to pay immediately.

Depending on the type and amount of debt, HMRC may allow you to spread payments over several months or another agreed period.

You will generally need to provide information about your financial circumstances and demonstrate how you intend to repay the debt.

HMRC will consider factors such as the amount outstanding, your ability to pay and your proposed repayment schedule.

Keep in mind that:

• You must meet the relevant eligibility requirements.
• HMRC needs to agree to the proposed arrangement.
• Interest will generally continue to accrue on overdue tax.
• You must make the agreed payments on time.
• You should continue to submit any tax returns required by their deadlines.
• You must keep up with other tax payments that become due.

If your circumstances change and you can no longer afford the agreed instalments, contact HMRC promptly. Do not simply stop making payments without discussing the situation.

Can You Set Up a Time to Pay Arrangement Online?

Some taxpayers can set up a payment plan through their HMRC online account without speaking to an adviser.

Online arrangements are subject to eligibility conditions, including limits relating to the outstanding balance and the type of tax debt. These conditions can change, so check the current HMRC guidance before relying on this option.

If you are not eligible to arrange payments online, or your situation is more complicated, you may need to contact HMRC to discuss your options.

You can find the official guidance by searching GOV.UK for “Pay your Self Assessment tax bill in instalments.”

What Happens If You Miss the Self Assessment Payment Deadline?

Missing a Self Assessment payment deadline can increase the amount you owe.

HMRC may charge interest on overdue tax, and late payment penalties can apply depending on how long the tax remains unpaid and the circumstances involved.

For many Self Assessment debts, the standard late payment penalty structure includes:

• 30 days late: A penalty of 5% of the tax unpaid at that point may apply.
• 6 months late: A further penalty of 5% of the tax still unpaid may apply.
• 12 months late: Another penalty of 5% of the tax still unpaid may apply.

These penalties are subject to the applicable rules and calculations. They are separate from interest, which can continue to accrue.

If you cannot pay by the deadline, contact HMRC as soon as possible to discuss your options. A payment arrangement may help you manage the debt, but you should confirm how it affects your particular liability and any penalties.

Do not confuse late payment penalties with late filing penalties. If you are required to submit a tax return, you should still file it on time even if you cannot pay the tax due.

Should You Still Submit Your Tax Return If You Cannot Pay?

Yes. If you are required to file a Self Assessment tax return, you should generally submit it by the deadline even if you cannot afford the tax bill.

Failing to file and failing to pay are two different issues. You can face a late filing penalty even if you have a valid reason for struggling to pay your tax.

Submitting your return on time also helps establish the amount you owe and gives you clearer information when discussing a repayment arrangement with HMRC.

If you are unsure whether you need to submit a return, or you have made a mistake in a return you have already filed, consider seeking professional tax advice.

What If You Cannot Afford Your Payments on Account?

Some Self Assessment taxpayers must make payments on account towards their next tax bill.

These are advance payments based on your previous year’s tax liability. They are generally due on 31 January and 31 July, although exceptions apply.

If you expect your income to fall, you may be able to apply to reduce your payments on account.

For example, if you were self-employed last year but expect to earn significantly less this year, your previous tax bill may not accurately reflect your current position.

However, be careful when reducing payments. If you reduce them too much and your final tax liability is higher than expected, you may have to pay the shortfall along with interest.

Before making a reduction, estimate your current year’s income and tax liability as accurately as possible. A qualified accountant or tax adviser can help you assess whether a reduction is appropriate.

Practical Ways to Manage Your Tax Bill

If your tax bill is putting pressure on your finances, a few practical steps may help you regain control.

Review Your Income and Expenses

Start by listing your income, essential household expenses, business costs and other debts. This will help you understand how much you can realistically afford to pay towards your tax bill.

Avoid agreeing to a repayment amount that leaves you unable to cover essential expenses.

Check Your Tax Return for Errors

If your tax bill seems higher than expected, review your return to check that your income, allowable expenses and other relevant figures have been reported correctly.

Self-employed taxpayers may be able to claim qualifying business expenses, provided they meet the relevant rules and have appropriate records.

Do not claim expenses simply to reduce your bill. Only include legitimate claims supported by your circumstances and the applicable tax rules.

Keep Money Aside for Future Tax Payments

If you are self-employed or earn income that is not taxed at source, consider setting aside a portion of your earnings regularly.

A separate savings account can help prevent tax money from being spent on day-to-day costs.

The amount you need to save will depend on your income, expenses and tax position. Reviewing your finances throughout the year can make future payment deadlines easier to manage.

Get Professional Advice

Tax bills can become complicated when you have multiple income sources, rental properties, business income or previous unpaid liabilities.

An accountant or tax adviser can review your position, help you understand the amount due and explain which options may be available.

Getting advice early can also help you avoid mistakes when submitting returns, claiming expenses or reducing payments on account.

Frequently Asked Questions

1. Can HMRC let me pay my Self Assessment tax bill monthly?

Yes, HMRC may allow eligible taxpayers to spread their tax bill through a Time to Pay arrangement. The repayment period depends on your circumstances, the amount owed and HMRC’s approval.

2. What happens if I cannot pay HMRC by 31 January?

Interest and late payment penalties may apply if you miss the deadline. Contact HMRC as soon as possible to discuss whether you can arrange instalments. You should still submit your tax return on time.

3. Will HMRC cancel my tax debt if I cannot afford to pay?

Being unable to afford your tax bill does not automatically cancel the debt. HMRC may agree to a repayment arrangement, but any further options depend on your circumstances and the applicable rules.

4. Can I arrange a payment plan if I have already missed the deadline?

You may still be able to discuss a Time to Pay arrangement after missing the deadline. Contact HMRC promptly and explain your financial circumstances. Interest and penalties may already have accrued.

5. Does a Time to Pay arrangement stop interest?

Interest generally continues to accrue on overdue tax while you repay it. Check the terms of your arrangement and the relevant HMRC guidance to understand what applies to your debt.

Final Thoughts

Struggling to pay your Self Assessment tax bill does not mean you have run out of options. The most important thing is to understand how much you owe, submit your tax return on time and take action before the situation becomes more difficult.

If you cannot pay the full amount, check whether you qualify for a Time to Pay arrangement and contact HMRC to discuss your circumstances. Review your finances carefully and make sure any repayment plan you agree to is realistic.

At Pro-Taxman, we understand that tax matters can sometimes feel confusing, particularly when you are managing a business, self-employment or several sources of income. Professional guidance can help you understand your tax position and make informed decisions about your next steps.

Need help with your Self Assessment tax return? Visit www.pro-taxman.co.uk to find out how Pro-Taxman can support you with your tax and accounting needs.

Disclaimer: This article is for general information only and does not constitute personal tax, financial or legal advice. HMRC rules, eligibility requirements and penalties may change. Check the latest official guidance or seek professional advice about your individual circumstances.