If you are unable to pay your tax bill in full, you might be able to arrange for a monthly payment plan using HMRC’s “Time to Pay” service.
The Time to Pay system was set up to help individuals struggling to pay their bills in full and it allows self-assessment taxpayers to manage how they pay their tax.
Based on the amount of tax due and the amount of time required to pay, the service generates a customised monthly payment schedule for the taxpayer.
The Time to Pay agreement is not a set, formal contract and is intended to be flexible. It can be changed over time, so if your income increases or you get a windfall (like an inheritance), you can amend the monthly amount.
Setting up a payment plan
To set up a payment plan you’ll need to have the following to hand:
You may be able to set up a payment plan online, depending on which type of tax you owe and how much you owe.
If you owe tax from Self-assessment
You can set up a Self Assessment payment plan online if you:
- have submitted your latest tax return
- owe £30,000 or less
- are within 60 days of the payment deadline
- have no outstanding debts or other payment arrangements with HMRC.
When you set up your plan, HMRC will ask you questions about your income and expenses.
If you owe employers’ PAYE contributions
You can set up an employers’ PAYE payment plan online if you:
- owe £50,000 or less
- plan to pay your debt off within the next 12 months
- possess debts dated no more than five years
- have no outstanding debts or other payment arrangements with HMRC.
- have sent any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due
If you owe tax from VAT
You can set up a VAT payment plan online if you:
- have submitted your latest tax return
- owe £20,000 or less
- are within 28 days of the payment deadline
- have no outstanding debts or other payment arrangements with HMRC.
- plan to pay your debt off within the next 6 months
Your accountant or agent (if you have one) is unable to set up a Time to Pay arrangement on your behalf.
You can do this yourself as long as you have PAYE for employer enrolment by logging into your business tax account.
How Blue Spire can help
It can be challenging to balance running all aspects of your business and staying on top of your finances at the same time.
Blue Spire can assist by offering guidance on how to best manage your finances, all the while ensuring that you are completely compliant and maximising your tax savings.
Book a free consultation with one of our Directors today and we will be happy to help.
| If you have any questions or need advice on any of the above, then please do not hesitate to contact us. |
