The cost of living crisis, including high energy bills, means you may struggle to pay your Self-Assessment tax bill in January. Help is available though, as you could set up a Time to Pay Arrangement with HMRC ...
It allows you to pay your tax bill in more affordable monthly instalments. The arrangement can cover all outstanding amounts plus associated interest and penalties. In many cases, this can simply be done online, though, for larger amounts, you may need to contact HMRC directly and explain your circumstances and see if they'll accept an arrangement.
It's advisable that you set up your Time to Pay Arrangement before the 31st of January deadline as trying to sort it out when HMRC chases you for payment will be more difficult. Remember, if HMRC believes you can pay your bill in full, they will expect you to do that rather than setting up an arrangement.
You can set up a Time to Pay Arrangement online if:
- you have filed your 2021/22 tax return
- you owe less than £30,000
- you are within 60 days of the payment date
- you plan to pay your debt off within the next 12 months or less
To set up an arrangement online, you will need to log in to your Government Gateway account.
HMRC will always take your income and expenditure into account and look at what assets you have when working out what you can afford to pay. HMRC will not usually expect the payments under the agreement to be more than 50% of your disposable income and the length of the arrangement will depend on how much tax you owe.
There is no fixed length to a Time to Pay Arrangement and payments are usually made by direct debit.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.