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Kristian Charles Williams

Kristian Charles Williams

Jan 19, 2021

Pay your Self-Assessment Tax Bill in instalments with a HMRC payment plan.

If you haven't put money aside throughout the year to pay your tax bill often you are caught short. So why not pay it off in instalments.

Did you know that HMRC offers a payment plan 'Time to Pay (TTP) for self-employed people filing their self-assessment?

It's not something they heavily promote but obviously this year there is a sizeable demand for it. )Maybe this trend of generosity will see our 'tax returned' in 2022?)

The HMRC payment plan is called  a 'Time to Pay' (TTP) whereby taxpayers can use instalment arrangements to pay their self-assessment tax bills to help spread the cost.

This year, HMRC has increased the threshold from £10,000 to £30,000 resulting in over 25,000 people signing up and setting up the payment plans. A total of £69.1m of tax is being handled under the Time-to-Pay scheme with the average self-assessment payment plan being £2000-£3000.

Self-Employed peeps will be able to spread their payments over 12 months. Unfortunately and frustratingly from 1 February, an interest rate of 2.6% will apply.

TAXO'D TOP TIP - My freelance brothers and sisters - THIS IS NOT A FREE SERVICE FROM HMRC (is it ever?) However, TAXO'D are telling you this as it may offer a lifeline to those that need it now more than ever.

You can choose how much to pay straight away and how much you want to pay each month. If you don’t keep up with your repayments, HM Revenue and Customs (HMRC) can ask you to pay everything you owe.

HMRC have commented “We know the past year has been tough for many businesses and self-employed people, which is why we’re helping them spread the cost of their tax bill into monthly payments. Self-assessment customers can use the self-serve Time to Pay facility for amounts up to £30,000 with almost 25,000 customers already benefiting from the service.”

TAXO'D blog - HMRC time to pay

How to sign-up and access the plan?

On completing your 2019/2020 tax return and now knowing what tax you owe, there are two ways to apply for the payment plan :

Is that it? Ha! Come on .. is it ever that easy?

These are the eligibility criteria:

  • no outstanding tax returns
  • no other tax debts
  • no other HMRC payment plans set up
  • the debt needs to be between £32 and £30,000
  • the payment plan needs to be set up no later than 60 days after the due date of a debt.

The deadline to submit the 2019/20 tax return falls on 31 January 2021.

Want to start putting money aside for your next tax bill?

Also worth noting is that you can set up a budget payment plan if you want to put money aside to cover your next Self Assessment tax bill. This is not a payment on account, which you make once every 6 months towards your next tax bill. The budget payment plan lets you:

  • decide how much to pay each week or month
  • stop paying for up to 6 months

You must be up to date with your previous Self Assessment payments.

To conclude, set up your plan using your HM Revenue and Customs (HMRC) online account. Go to the Direct Debit section and choose the budget payment option when filling in the Direct Debit form.If the amount in your budget payment plan does not cover your next bill in full, you’ll need to pay the difference by the payment deadlines.

TAXO'D blog - HMRC time to pay

Why not let TAXO'D tax return app for freelancers handle all of your tax woes?

We provide an end-to-end tax solution for all freelancers and most self-employed tax payers. Record as you go, know what you owe and file direct to HMRC. No Green Form. No More Accountants. All from your phone or desktop.

TAXO'D is a salary tax calculator. You record as you go (on your phone or your computer) day by day, throughout the tax year. As the weeks unfold and you are actively recording your income and expenses. With TAXO'D personal tax app - you will see in real-time displays the tax and National Insurance that you owe.With TAXO'D tax return software know exactly what tax you owe and when you owe it. Simple.

TAXO'D mobile tax tool does away with the need for an accountant, saving you further money and time. If you are earning money independently and responsible for your own taxes then sign up today. And find out why TAXO'D is the best self assessment software for freelancers and contractors.

Tax Sucks! Spend less time and money on it with TAXO'D tax filing app

Disclaimer: This is simply a guide and should not be treated as tax advice. Contact HMRC directly if you need tax advice.

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TAXO'D blog Author

Kristian Charles Williams

Head of Growth, Partnerships & Mugician

A freelance human and one that resides in creative industries. For the best part I have been an independent musician and a (not-so-independent) composer.

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