Owe HMRC money? Time to Pay and your options

HMRC has stronger collection powers than most creditors. It can take money from your bank account or your wages, and send enforcement agents, in many cases without first going to court. That makes tax a priority debt. It also means acting early pays off: HMRC’s first step is usually to agree an affordable plan, and it only uses its tougher powers when people do not engage.

This guide covers personal tax: Self Assessment, PAYE underpayments and old tax credit overpayments. If you run a business, read it alongside our guide to business and self-employed debt.

How does HMRC Time to Pay work?

Time to Pay is HMRC’s name for a payment plan that lets you clear an overdue tax bill in monthly instalments. HMRC checks whether the plan is affordable for you. If you cannot agree one, it will ask for the full amount.

What HMRC looks at, according to GOV.UK:

• Your income and spending. You will usually be asked to pay around half of what you have left each month after rent, food, utility bills and fixed outgoings.
• Savings and assets. HMRC expects you to use these to reduce the debt as much as possible first.
• Other taxes. You must tell HMRC about any other tax you owe.
• Evidence from a debt adviser. HMRC will accept a Standard Financial Statement from independent debt advice as evidence of your budget.

There is no fixed time limit on a Time to Pay plan. It depends on how much you owe and what you can afford.

Can you set up an HMRC payment plan online?

For Self Assessment, often yes. You can usually use HMRC’s online service if all of these apply:

• you owe £30,000 or less
• you can clear the debt within 12 months
• your tax returns are up to date
• it is less than 60 days after the payment deadline
• you have no other tax debts and no other HMRC payment plans

You will need your Government Gateway or GOV.UK One Login details, your Unique Taxpayer Reference and a UK bank account you can set up a Direct Debit from. If you owe more than £30,000, or need longer, call the Self Assessment Payment Helpline on 0300 123 1813; you may still be able to agree a plan by phone.

HMRC also runs online payment plan services for VAT and employers’ PAYE, with their own conditions and limits. Tax you owe as an employee through PAYE, and Simple Assessment bills, cannot be spread using the online service: phone HMRC instead.

What can HMRC do if you do not pay?

If you do not contact HMRC or refuse to pay, GOV.UK says it may:

• ask a debt collection agency to collect the money
• collect what you owe through your wages
• take things you own and sell them
• take money directly from your bank or building society accounts
• take you to court, or make you bankrupt

Some of these need a closer look.

Direct recovery from your bank account

In England, Wales and Northern Ireland, HMRC can take money owed straight from your bank and building society accounts. It restarted this power in September 2025 on a test basis and began a wider rollout in April 2026. HMRC’s published safeguards are that it only considers debts of more than £1,000, always leaves at least £5,000 across your accounts, sends agents to visit every individual face to face first, and gives 30 days to object, with a right to appeal to the county court on grounds including hardship.

HMRC consulted from 23 June to 28 August 2026 on a further power to take regular monthly deductions from bank accounts for lower-value debts where people persistently do not engage. As at September 2026 that is a proposal only, and not in force.

Through your tax code

HMRC can adjust your tax code to collect a debt through your pay or pension, spread across the remaining months of the tax year. GOV.UK says it can tax a maximum of 50% of your gross income this way.

Enforcement agents and court action

In England and Wales HMRC can use enforcement agents (bailiffs) to take and sell goods, and in Northern Ireland it uses distraint. In Scotland it uses a summary warrant, after which you have 14 days to pay or agree a plan. HMRC can also apply to court for orders such as attachment of earnings or a charging order, and it petitions for bankruptcy only as a final step. Bailiffs collecting Income Tax can force entry to a home as a last resort, which is not true of most debts. See our guide to bailiffs.

What about tax credit overpayments?

Tax credits ended on 5 April 2025, but overpayments are still being collected.

• If you moved to Universal Credit, HMRC is likely to transfer the debt to the DWP, which will take it from your Universal Credit. You will get a letter (TC1131) first, and any existing HMRC payment plan for that debt ends. From then on it is a DWP debt: see DWP Debt Management.
• If you are not on Universal Credit, you pay HMRC directly. National Debtline says you have 42 days to pay or arrange a plan, and HMRC may pause recovery for 12 months or write the debt off if you can show you cannot afford it.
• If you think HMRC got it wrong, you can dispute recovery on form TC846. National Debtline says HMRC expects this within three months of the decision.

Can HMRC debt go into an IVA, DRO or bankruptcy?

Yes. Tax debts can be included in all three, and in Breathing Space. They are still a priority debt, so while you are sorting things out, deal with HMRC before credit cards and loans. Our guide to priority debts explains why.

• Debt relief order: Citizens Advice lists income tax arrears among the debts a DRO can include, provided you meet the DRO conditions. See debt relief orders.
• Bankruptcy: tax debts are not among the debts that survive bankruptcy. See bankruptcy.
• IVA: income tax, National Insurance and tax credit overpayments can be included. But HMRC votes on the proposal like any other creditor, and approval needs 75% by value of creditors who vote. If HMRC is owed a large share of your debts, its vote can decide the outcome. Citizens Advice says an IVA might not be the right option if most of your debts are tax.

HMRC’s published approach to IVAs is that it expects your tax returns to be up to date, the proposal to say you will pay all future tax in full and on time, full and honest disclosure, and the best offer first time. It only votes for a proposal it thinks has a realistic chance of succeeding.

IVAs are available in England, Wales and Northern Ireland. In Scotland the options are different: see debt solutions in Scotland. Free, impartial debt advice is available from MoneyHelper, StepChange, Citizens Advice and National Debtline, and the tax charity TaxAid helps people on low incomes with HMRC problems. See where to get free debt advice, and compare the formal options in IVA or bankruptcy?

What to do next

1. Check the amount is right. If you think it is wrong, or a penalty is unfair, challenge it before agreeing a plan.
2. If you owe £30,000 or less in Self Assessment and meet the conditions, set up a plan online as soon as possible after the deadline. Otherwise call HMRC.
3. Work out a realistic budget first. A free debt adviser can produce a Standard Financial Statement that HMRC accepts.
4. If you also owe other creditors and cannot see a way through, get free debt advice about Breathing Space and the formal options.