What if I can’t pay my tax bill?

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That is a good question, one we do get asked a lot this time of year. Firstly, lets look at the financial issues with not paying tax on time (what it will cost you). We will then take a look at who to call.

There is a TL;DR (Too Long; Didn’t Read) summary below for those who don’t like numbers or are short on time.

The Numbers


Interest applies to late tax of any type (‘Balancing Payment’ or ‘Payment on Account’)

‘Balancing Payment’ is the tax due on the year on question, ‘Payment on Account’ is tax in advance for the next year.

3.25% is charged on the amount for the period overdue.


Maggie is due to pay £5000 on 31st Jan 2018. She pays it on 28 Feb 2018, 28 days late.

£5000*3.25% = £162.50 (per year).

Divide by 365 days, multiply by days late (28) = 365/28 = ~£12 of interest


Penalties only apply to ‘Balancing Payments’ (the tax due on the year in question).

Penalties are applied in 5% ‘blocks’:

5% on amounts not paid after 30 days
Additional 5% at the 6 month stage (on the amount outstanding at this point)
Additional 5% at the 12 month stage (on the amount outstanding at this point)


Maggie is late again, due to pay £5000 on 31st Jan 2019 and a ‘Payment on Account’ of £2500 at the same time.

She pays £5000 on 1st April 2019
She pays £2500 on 31st August 2019

Her penalties would be £250 (5% on the £5000 for being over 30 days late) and £0 (on the £2500) as this relates to a payment on account. This is in addition to any interest owed.

Should I call HMRC?

Well, this is your call (pun intended). As you can see from the penalty/interest information above, if you are only going to be a little late (say under 30 days), you may decide its not worth the time. That said, HMRC advice would be to call them as soon as possible once you are aware you cannot pay.

From experience, HMRC’s recovery of debt can be anywhere from non-existent to a collection man on your doorstep two weeks later – there doesn’t appear to be pattern to this. From this point of view, if you think you are going to be any more than ‘a little’ late, it is definitely worth the call.

They have a Business Payment Support Service (you don’t have to be a business to call) which can help you. Normally this will involve some questions and then a set up of a payment plan via instalments.

The number to call is 0300 200 3835, open Monday to Friday 8-8 and Saturday 8-4.

All the details are here: https://www.gov.uk/difficulties-paying-hmrc

TL:DR (Too Long; Didn’t Read) Summary:

*If you are going to be more than ‘a little’ late, call HMRC and arrange a payment plan https://www.gov.uk/difficulties-paying-hmrc

*Interest will be charged at 3.25% of the tax due on a daily basis while outstanding

*Tax relating to the ‘balancing payment’ (the bill for the year just gone) will have a 5% penalty applied after 30 days, again at 6 months and again at 12 months late.

If you would like to chat this through with one of our team, don’t hesitate to contact us on 02392 240040.

For wider advice on debt, there are some great free resources out there, such as www.stepchange.org and many other great charities (a quick google for ‘list of debt charities’ will bring you a list).