'I can't afford to pay my tax bill, what help can I get from HMRC?'

It’s understandable why people put off a tax return for as long as possible - but if you’ve not planned how you will pay your impending tax bill, then you risk a penalty if you find you do not have the money to pay HMRC before the clock strikes midnight on 31 January.

More than 3 million people are yet to file a tax return and are at risk of a fine should they not complete their tax return and pay up before the tax return deadline.

But, before you press the panic button, you may be able to take advantage of a government scheme called Time to Pay, which lets you pay your tax bill in instalments.

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Here’s how it works and who can use it.

What is HMRC’s Time to Pay?

Time to Pay is an arrangement that lets you pay your tax return bill in instalments if you are unable to pay it in full on 31 January.

You’ll need to contact HMRC as soon as possible if you think you may need the payment plan to pay your tax bill.

While the payment plan incurs an interest charge, it will give you more time and is cheaper than an HMRC fine, which is initially £100 but the late fee increases each month until you pay.

How to apply for HMRC Time to Pay plan and who can get it?

You can apply for Time to Pay online on gov.uk via your Government Gateway account. To set up the payment plan, you’ll need your unique tax reference number and your bank details that can be used for direct debit payments.

Make sure you have filed your latest return - and you can then apply for the plan as long as your bill does not exceed £30,000 and you are within 60 days of the payments deadline of 31 January.

But be warned, if you have other outstanding debt with HMRC you may be rejected for the plan.

HMRC will also not approve it if it does not think you will be able to keep up with repayments each month. You will have to answer questions about your income and spending. The repayment plan usually lasts 12 months.

You should have an idea of what you can repay each month, how much you spend per month and what savings and investments you have. It is possible that HMRC may ask you to use your savings or investments to help pay your tax bill.

How much are late payment penalty fees?

If you fail to pay by midnight 31 January 2025, you will face hefty fees.

If you miss the 31 January deadline to file and pay your return, you’ll be slapped with £100.

After three months, you will be charged £10 a day for 90 days, plus the original fine

After six months, it £300 (or 5% of the tax due, whichever is higher) - plus the previous fines above

After 12 months, it’s another £300 (or 5% of the tax due if it is higher).

The repayment interest rate is 3.75%.

Late payment interest rate in 7.25%.

Can you use a credit card to pay your tax bill?

You cannot use a personal credit card to pay your tax bill.