HMRC Time to Pay Arrangement: How to Set Up a Self Assessment Payment Plan in 2026

If you have filed your 2024-25 Self Assessment and are staring at a tax bill you cannot pay in full, you are not stuck. HMRC’s Time to Pay (TTP) arrangement lets you spread the debt over monthly instalments — and for many self-employed people and side-hustlers, you can set it up online in about 15 minutes without speaking to anyone.

This guide covers the eligibility rules, the exact online journey, when you must phone instead, how interest and penalties interact with a TTP, and a decision framework for comparing a TTP against a 0% credit card or personal loan.

What Time to Pay Actually Is

A Time to Pay arrangement is an informal instalment plan between you and HMRC for an unpaid Self Assessment debt. It is not a write-off, it is not a payment holiday, and it does not pause interest. What it does is move you from “late payer at risk of enforcement and surcharges” into “compliant taxpayer on an agreed plan”.

Once a TTP is in place:

HMRC stops chasing the debt (no demand letters, no debt collection referral)
Late-payment penalties are typically suspended if the TTP is agreed before the 30-day, 6-month, and 12-month surcharge dates
Interest continues to accrue daily on the outstanding balance
You make monthly Direct Debit payments to HMRC for the agreed term

Most TTPs run for up to 12 months. Longer plans are possible by phone but require detailed income and expenditure evidence.

Online Self-Service Eligibility

Since 2020, HMRC has offered an online self-service TTP for Self Assessment debt. You can set one up yourself, without ringing the Payment Support Service, if all of these are true:

The debt is £30,000 or less (this is the SA-debt-only ceiling — not your total HMRC liability)
You have filed the relevant tax return (HMRC must know the exact figure owed)
The debt is less than 60 days overdue
You have no other payment plan in place with HMRC
You have no other tax debts that are also unpaid

If you tick all five, you can self-serve. If any are missing — particularly debt over £30,000 or a return not yet filed — you must phone HMRC instead (see below).

The Online Journey: Step by Step

The official entry point is gov.uk/pay-self-assessment-tax-bill/pay-in-instalments. Have your Government Gateway login and your bank details ready before you start.

Sign in to your Government Gateway account. This is the same login you use for filing Self Assessment. If you have lost your User ID, recover it via the “forgot user ID” link — but allow extra time because the recovery letter can take 7 days.
HMRC checks eligibility automatically. Once you sign in, the system pulls your Self Assessment record and confirms whether you qualify for online self-service. If you do not qualify, you will be told to phone the Payment Support Service instead.
Confirm the debt. HMRC shows you the exact amount owed, broken down by tax year. Check it matches your own calculation. If something looks wrong (e.g., a payment on account you already made is not showing), do not proceed — sort the underlying record first.
Choose a monthly amount and duration. You can pick a monthly figure that fits your cash flow, up to a 12-month maximum term. HMRC will calculate the implied number of instalments. The first instalment is usually due within 30 days.
Provide bank details for Direct Debit. HMRC takes payment by Direct Debit only — you cannot pay manually each month. Make sure the bank account is in your name (joint accounts are accepted if you are a named holder).
Confirm and submit. You will receive a confirmation reference. Keep this somewhere safe. HMRC also sends a confirmation letter to your registered correspondence address.

The whole journey takes about 10-15 minutes. Once submitted, the TTP is live immediately — penalty enforcement stops, but interest keeps running on the declining balance.

When You Must Phone Instead: Payment Support Service

If your SA debt is over £30,000, or you have any other complicating factor, you cannot self-serve. You must call the Payment Support Service on 0300 200 3835 (Monday to Friday, 8am to 6pm).

This is also the line for:

TTPs that span more than 12 months
TTPs that cover multiple HMRC debts (e.g., Self Assessment plus VAT or PAYE)
Situations where you cannot afford the standard pro-rata monthly amount
Cases where you have already missed a previous TTP

Before you call, gather:

Income evidence: recent payslips or business invoices, expected income for the next 12 months
Expenditure summary: rent or mortgage, utilities, food, transport, childcare, other unavoidable monthly costs
Current account balances: all current and savings accounts (HMRC will ask)
Other debts: credit cards, personal loans, mortgages, business debts
A monthly figure you can afford: be realistic — HMRC has discretion to refuse plans that look likely to fail

The call typically lasts 30-45 minutes. The HMRC officer will run an “income and expenditure” assessment and propose a monthly amount. You can negotiate within reason; if you cannot afford what they propose, ask them to extend the term rather than agreeing to a payment you will miss.

Interest Is Still Charged

The single most common misconception about Time to Pay is that it pauses interest. It does not.

HMRC charges late-payment interest on overdue Self Assessment from the day after the due date until the day the balance is cleared. The rate is set by reference to the Bank of England base rate plus 4 percentage points. As of mid-2026, with the BoE base rate near 4.25%, the HMRC late-payment interest rate is approximately 8.25% APR. Always confirm the current figure on the HMRC “Interest rates for late and early payments” page before quoting it to a client.

On a 12-month £8,000 TTP, the interest cost over the life of the plan is meaningful — roughly £350-£450 depending on the rate cycle. That is the price you pay to spread the debt versus paying in full on day one.

For a detailed breakdown of how the interest rate is calculated and how it has moved over the 2025-26 tax year, see our HMRC late payment interest 2025-26 explainer.

5% Surcharge Timing: The Hidden Cliff

The deadline that catches most people out is not the 31 January payment date itself — it is the 5% surcharge that lands 30 days after.

If your 2024-25 Self Assessment balancing payment is unpaid by 31 January 2027 and you have not set up a TTP by 1 March 2027, HMRC adds a 5% surcharge to the outstanding balance. On £8,000 that is £400 — a flat penalty on top of accruing interest.

The same 5% surcharge fires again at:

6 months late (31 July 2027 for 2024-25 debt)
12 months late (31 January 2028 for 2024-25 debt)

If you cannot pay in full by 31 January, set up the TTP before 1 March. A TTP agreed before each surcharge date typically suspends that surcharge — but only if the plan is in place by the relevant deadline. A TTP agreed on 5 March 2027 will not prevent the 5% surcharge that triggered on 2 March.

This is why “set up the TTP as soon as you know you cannot pay” is better advice than “set it up when HMRC chases you”. By the time HMRC writes, the first surcharge may already be locked in.

Worked Example: £8,000 Bill, 6-Month TTP

Anika is a freelance graphic designer. Her 2024-25 Self Assessment bill is £8,000 — comprising a £6,000 balancing payment plus a £2,000 first payment on account for 2025-26 (the other £2,000 POA falls due 31 July 2027).

She filed her return on 25 January 2027 but only has £2,500 saved for the tax bill. She pays £2,500 on 31 January 2027, leaving £5,500 outstanding.

On 25 February 2027 she sets up an online TTP:

Outstanding debt: £5,500
Term chosen: 6 months
Monthly Direct Debit: roughly £935 (principal + accruing interest)
First payment: 28 March 2027
Final payment: 28 August 2027

Because she agreed the TTP before 1 March 2027, the 5% surcharge (£275) is suspended. She still pays interest at the prevailing HMRC rate on the declining balance — roughly £100-£130 in total over the 6 months — but she avoids the surcharge entirely and HMRC stops chasing.

If Anika had waited until 10 March 2027, the 5% surcharge would already have triggered. She would still get a TTP, but the £275 surcharge would be locked onto her debt.

What Breaks a TTP

A Time to Pay arrangement is contingent on you holding up your side. The arrangement can be cancelled if you:

Miss a monthly Direct Debit (HMRC typically allows one missed payment if you contact them quickly, but a second missed payment usually voids the TTP)
Fail to file your next year’s Self Assessment return on time — being current on filing is a condition of the plan
Add new tax debt that you cannot pay (e.g., you incur a 2025-26 balancing payment of £3,000 while still on the TTP for the 2024-25 debt and do not address it)
Change bank accounts without updating HMRC — the Direct Debit fails and the plan defaults

If the TTP is cancelled, HMRC demands the full outstanding balance immediately and the surcharges that were suspended typically come back into play.

TTP vs Credit Card vs Personal Loan: Decision Framework

A TTP is not always the cheapest way to handle an unpaid tax bill. Three rough rules of thumb:

Use a TTP if:

You cannot get a 0% balance transfer or money transfer card large enough for the debt
A personal loan rate would exceed the HMRC late-payment interest rate (currently ~8.25%)
You want to keep your credit cards free for emergencies
You value the certainty of a fixed plan with no upfront fee

Use a 0% credit card if:

You can get a money transfer card with a 0% period long enough to clear the debt
The money transfer fee (typically 3-4%) is lower than 12 months of HMRC interest (~8.25% APR)
You have the discipline to clear the balance before the 0% period ends

Use a personal loan if:

You can secure a fixed-rate personal loan below the HMRC interest rate
You want a longer repayment term than HMRC will agree (TTPs over 12 months need detailed I&E)
You prefer keeping HMRC at arms length

For a £6,000 debt over 12 months: a TTP costs roughly £250-£300 in interest. A 0% money transfer card with a 3.5% fee costs £210 upfront but requires the discipline to clear before the 0% ends. A 9% personal loan over 24 months costs roughly £580. The TTP is rarely the absolute cheapest — but it is often the simplest and most certain.

Need to Work Out the Numbers First?

Before setting up a TTP, run your 2025-26 payment on account through the Payment on Account Calculator — you may have a reduction claim available that lowers the debt before you start. And if you are already past 31 January, the Self Assessment Penalty Calculator will model the exact surcharges and interest you face if you do not act.

For broader context on how payments on account fit into the Self Assessment cycle, read Payments on account explained. And if your debt is already running late, see Self Assessment late filing penalty relief for the appeal grounds HMRC will accept.

FAQs

Will a Time to Pay arrangement affect my credit rating?

HMRC does not report TTPs to credit reference agencies, so a TTP itself does not appear on your credit file. However, if HMRC issues a winding-up petition, county court judgment, or transfers the debt to a debt collection agency because you missed payments and let the TTP collapse, those steps can affect your credit rating. Stay on the plan and your credit file is unaffected.

Can I set up a Time to Pay for the upcoming 31 July payment on account, before it is due?

Generally no — the online self-service tool requires the debt to be overdue (the deadline has passed) and the return for the relevant year to be filed. The exception is the “Budget Payment Plan”, a separate scheme where you make voluntary advance payments toward a future SA bill. If cash flow is the issue, look at SA303 to reduce your POA first via the Payment on Account Calculator, rather than waiting to default and then arranging a TTP.

What if I cannot afford even the minimum monthly payment HMRC proposes?

Phone the Payment Support Service (0300 200 3835) and ask for an extended-term plan based on your income and expenditure. If your circumstances are genuinely severe — long-term illness, redundancy with no immediate income, business failure — HMRC has discretion to agree very long terms or, in rare cases, to write off part of the debt. Be honest about your full financial picture; agreeing to a plan you cannot afford and then defaulting is worse than negotiating a realistic one upfront.