What happens if you can’t pay your Self Assessment tax bill?

Even the most organised small business owners can occasionally find themselves struggling to pay their Self Assessment tax bill on time.

If this happens to you, then don’t worry. There are some simple steps you can take to make payment arrangements with HMRC and potentially avoid a penalty. 

If you can’t pay your Self Assessment tax bill on time

If you know in advance that you won’t be able to pay your Self Assessment tax bill by the deadline, you should contact HMRC to set up a Time To Pay Arrangement. You won’t usually have to pay a penalty, provided that you let HMRC know and set up a payment plan before the deadline has passed. However, you will have to pay interest on any tax that is paid late.

If the deadline has recently passed, then don’t panic. You can usually set up a payment plan via the HMRC website up to 60 days after the payment deadline, provided that:

  • you owe £30,000 or less
  • you do not have any other payment plans or debts with HMRC
  • your tax returns are up to date

If you don’t meet the above criteria, or if it’s more than 60 days since your tax bill was due, you should call the Self Assessment helpline.

‘Nominated partners’ in a partnership can negotiate a Time to Pay Arrangement with HMRC on behalf of the partnership or individual partners. A ‘nominated partner’ is an HMRC term for the person who is acting on behalf of the partnership in relation to a tax bill. The nominated partner must have been included as a partner in the partnership’s tax return for the year in question.

If you’re struggling to pay because of coronavirus

The government has launched a number of initiatives to help businesses that are struggling as a result of the coronavirus pandemic. For example, if you’re self-employed and your business has been affected by coronavirus, you may be able to claim a grant through the Self-Employment Income Support Scheme (SEISS). The final SEISS grant will be open for applications from late July 2021.

If you’re struggling to pay a tax bill or your business is struggling as a result of coronavirus, you can contact HMRC’s dedicated Covid-19 helpline to get more information about what support is available. You can also find more information on our coronavirus support hub.

Avoid surprise tax bills with FreeAgent

FreeAgent gives you a real-time overview of your Self Assessment tax position so you’ll always know what you owe and you won't be left scrambling at the last minute. Try a 30-day free trial of FreeAgent to see for yourself.

Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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