Tag: payment plans

Festive finances: Budget for Christmas and spread the cost of tax bills

  • Self Assessment customers unable to pay their tax bill in full by 31 January 2025 can spread the cost using HMRC’s online Time to Pay system 
  • Time to Pay plans support those who cannot pay their tax bills on time by arranging regular monthly payments in return for avoiding any further late payment penalties  
  • Online payment plans can be set up for tax bills up to £30,000, without the need to contact HMRC directly

With Christmas preparations well underway in many households, considering financial commitments may be on the agenda. So HMRC is reminding people who pay tax by Self Assessment of the opportunity to spread the cost of their bill. 

More than 15,000 Self Assessment customers have already set up a Time to Pay payment plan for the 2023 to 2024 tax year to help spread the cost, and there is still an opportunity to sign up for such an arrangement.  

HM Revenue and Customs (HMRC) offers these payment plans to support customers unable to pay their tax bill in full and looking to manage their tax payments over regular monthly instalments.

The online deadline to file a tax return for the 2023 to 2024 tax year and pay any tax owed is 31 January 2025. Anyone who is unable to pay their tax bill in full, owes less than £30,000 and is eligible, can quickly and easily apply online without the need to contact HMRC directly. Those that owe more than £30,000 are still able to apply but would need to contact HMRC. 

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “We’re here to help customers get their tax right and if you are worried about how to pay your Self Assessment bill, help and support is available.

“Customers can set up their online payment plan to suit their own financial circumstances and can spread those payments across a maximum of 12 months. It is a valuable option for someone needing extra flexibility in meeting their tax obligations.”

Taxpayers must file their Self Assessment tax return before setting up a Time to Pay arrangement.  

There are many ways in which people can pay their Self Assessment tax bill, including paying through the free and secure HMRC app or online at GOV.UK. A full list of payment options can be found on GOV.UK. There is also a video on YouTube that explains a customer’s Self Assessment tax bill and the different ways to pay. 

HMRC is encouraging people to be prepared and have all the information they need ready to file their Self Assessment tax returns early, so they can avoid any last-minute stress and know what they owe sooner. HMRC has a range of online help and support and YouTube videos to assist anyone completing their return, including first-time filers. 

Customers setting up a time to pay arrangement need to budget accordingly to ensure that regular monthly payments can be made. Any missed payment will incur interest as well as a penalty. 

HMRC recommends that anyone who regularly sell goods or provides a service through an online platform to find out more about selling online and paying taxes. The information on GOV.UK will help them decide if their activity should be treated as a trade and if they need to complete a Self Assessment tax return. 

Criminals use emails, phone calls and texts to try to steal information and money from taxpayers. Before sharing their personal or financial details, people should search ‘HMRC tax scams’ on GOV.UK to access a checklist to help them decide if the contact they have received is a scam   

People should never share their HMRC login information with anyone. Someone could use them to steal from them or claim benefits or a refund in their name. 

Simple Assessment 

HMRC is also reminding anyone who received a Simple Assessment letter that the deadline to pay any tax owed is 31 January 2025. Simple Assessment customers do not need to register and complete a tax return. 

Simple Assessment letters were issued to those who have unpaid Income Tax from the 2023 to 2024 tax year that cannot be collected via Pay as You Earn (PAYE) – by an employer or pension provider. 

Customers who receive a Simple Assessment on or after 31 October 2024 for tax owed during 2023 to 2024 tax year will have 3 months from the date of their assessment to pay their tax bill. 

Both Self Assessment and Simple Assessment payments can be made in full, or in smaller amounts if the balance is cleared before the deadline. Payments can be made on GOV.UK or through the HMRC app. 

44,800 customers opt to spread the cost as tax deadline looms

Self Assessment customers can set up a payment plan with HMRC to pay their tax bill

As the deadline to submit a Self Assessment tax returns looms, nearly 44,800 people have sorted their tax bills totalling almost £148 million, by setting up a payment plan.

More than 7.7 million Self Assessment customers have already filed their tax return for the 2022 to 2023 tax year, but HM Revenue and Customs (HMRC) is reminding anyone who still needs to pay their tax bill should do so before the deadline on 31 January or risk facing a penalty.

Those who are unable to pay in full can check online to see if they can set up a monthly payment plan called Time to Pay. If they owe less than £30,000, they can use the affordability checker on GOV.UK to help decide the best arrangements for them. Interest will be applied to any outstanding balances from 1 February.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “We want to help Self Assessment customers meet their obligations and there is no time like the present to choose the right payment option for you.

“Whether you choose to pay in instalments, via the HMRC app or using online banking, search ‘pay your Self Assessment tax bill’ on GOV.UK for a full list of options.”

In addition to those who have set up an online payment plan, in December 2023, 28,794 customers used the free and secure HMRC app to pay more than £42 million in tax owed. Customers can also receive a tax refund via the app.

They should include their bank account details when filing, so that if HMRC needs to make a repayment, they can do so quickly and securely.

For those who pay their current estimated tax bill via Payment on Account, the first instalment for the 2023 to 2024 tax year is due on 31 January.

A full list of payment options can be found on GOV.UK.

There is also a video on YouTube that explains a customer’s Self Assessment tax bill and the different ways to pay.

HMRC will consider a customer’s reasons for not being able to meet the deadline for completing their Self Assessment on time. Those who provide HMRC with a reasonable excuse may avoid a penalty.

The penalties for late tax returns are:

  • an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time
  • after 3 months, additional daily penalties of £10 per day, up to a maximum of £900
  • after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater
  • after 12 months, another 5% or £300 charge, whichever is greater

There are also additional penalties for paying late – 5% of the tax unpaid at 30 days, 6 months and 12 months. Interest will also be charged on any tax paid late.

People should be aware of the risk of falling victim to scams and should never share their HMRC login details with anyone, including a tax agent, if they have one. HMRC scams advice is available on GOV.UK.

More information about Self Assessment