Self assessment, PAYE and VAT payment dates are always known in advance of the deadlines. However time to pay is sometimes needed.
Good news! You can set up a payment plan online without contacting HMRC directly.
‘Although we always know when tax payments are due, issues such as cash flow problems or unexpected financial challenges can impact our ability to pay the full amount on time,’ says Felicity Reader, accounting guru and tax specialist at re:accounts Chartered Accountants in Stevenage. ‘It’s good to know there’s a payment plan option that, if it applies, can be created online without liaising with HMRC.’
HMRC Payment Plan Criteria
- Debt Ceiling
The level of debt owed to HMRC dictates if you can create a payment plan online, involving debt ceilings of:
- £30,000 for self assessment taxpayers.
- £100,000 for businesses owing PAYE.
- £100,000 for businesses owing VAT.
- Repayment Terms
For individuals owning self-assessment income tax, HMRC expects 50% of disposable income after bills and housing costs to be paid into the time-to-pay arrangement. The “affordability checker” tool allows you to input your income and expenditure information. You then receive a recommendation for an affordable plan.
Businesses owing PAYE and VAT debt under five years old may set up a payment plan online if the debt is to be repaid within the next 12 months. An income and expenditure assessment form recording details of how much the company or partnership receives and spends is required. In addition, information about the amount of cash held must be submitted. HMRC expects 75% of the company or partnership’s disposable income to be paid into the time to pay arrangement.
The late payment interest rate is set to rise from 7% to 9% from April 2025, subject to Bank of England base rate changes.
- Timing
Self-assessment taxpayers seeking time to pay must apply for a payment plan within 60 days of the payment deadline. At the time of application, all tax returns must have been filed with HMRC.
The business time-to-pay arrangement can be shortened if the financial position improves or extended if the situation worsens.
Are you worried about paying your tax bill?
Would the HMRTC payment plan suit you or your business?
Would you like to pay less tax? Saving money is our superpower. We’d love to help you. Contact the re:accounts team for a no-obligation chat … and a coffee!
