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Money, tax and benefits

Money, tax and benefits

What to do if you can't pay your tax bill

If you find you can't pay your tax bill the most important thing is not to ignore the demand. If there's a mistake on the bill, you can get it checked and corrected. If you can't pay the bill straight away, you may be able to come to an arrangement.

When you receive your tax demand or statement of account

If you're not sure that the amount's correct

If you're not sure your bill's right it's a good idea to start by checking the figures on your tax return. If you've accidentally added a nought to your income, you'll end up with a bill that's much bigger than it should be.

You could also check that you haven't used provisional figures in your return - if you have, your bill will be based on those figures. You will need to submit the correct figures to have the bill amended.

If your tax return figures are right, it may be that your bill includes penalties or surcharges because you sent your return in late. Any such charges will appear on your Statement of Account.

If the amount is correct but you can't pay

If your bill's right but you can't pay it, it's best to contact the HM Revenue & Customs (HMRC) office that sent you the request for payment right away. Alternatively you can ring the Payment Helpline on 01274 539 628 between 8.00 am and 5.00 pm, Monday to Friday.

If you ignore your bill HMRC will phone you anyway. If you continue to ignore it they may well take legal action to get the money.

Even if HMRC make the first contact you can still ask them to consider agreeing to a payment arrangement.

Each case is looked at individually but normally:

  • you'll be expected to pay in one lump straight away if you can
  • if you can't pay at once you might be allowed extra time to pay - either in one lump or by instalments
  • if you ignore the problem or you can't make a payment arrangement, legal action will be taken to collect what you owe

Payment arrangements - your rights

HMRC will consider any payment arrangement you suggest. If you think they've rejected it without considering it properly you can make a complaint but you can't appeal against their decision.

If you've received a demand but haven't sent in your tax return

HMRC won't consider any payment arrangement until you send in any overdue returns.

If you haven't sent in your return(s):

  • you will have incurred a fixed late filing penalty
  • HMRC will have estimated your bill
  • you may have to pay more penalties - even if you've paid the estimated tax demanded - until the return is filed

If you've received a warning letter about legal action

If you don't pay after HMRC has phoned you, the local recovery office will write to you. You will be warned that if you still don't pay they can start legal action against you to collect what you owe. You can still make a payment proposal at this time.

How to make a payment proposal

If you agree to pay the full amount within 28 days no further action will be required.

If you propose a longer time to pay you may have to give the recovery office details of:

  • your savings and other assets - for payment arrangements up to three months
  • your income, spending, savings and other assets - for payment arrangements longer than three months

You'll have to pay interest on any tax you pay late. At the moment this is 8.5 per cent for Self Assessment taxpayers.

Free advice if you can't pay your tax bill

If you want to talk to someone about your tax bill, you can get free advice from the Citizens Advice Bureau or from TaxAid, a charity that helps people with tax problems who can't afford to pay for advice.

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