What to Do If You Can't Pay Your Self Assessment Tax Bill by 31 January

Facing a Self Assessment tax bill you can’t pay by the 31 January deadline is more common than most people assume - especially if it lands on top of a Christmas spending balance you’re still working through - and HMRC has a specific, genuinely accessible process for it, provided you engage before the deadline passes, not after.

What happens if you simply don’t pay

Missing the payment deadline without arranging anything triggers late payment interest immediately from 1 February, and further late payment penalties of 5% of the unpaid tax kick in at 30 days, 6 months, and 12 months after the due date if the bill remains unpaid (people already in Making Tax Digital for Income Tax from April 2026 move to a newer penalty system for later tax years, with penalties from day 15 or 30 and then a daily-accruing rate) - these are separate from any penalty for late filing of the return itself, which has its own deadline and penalty structure.

The ‘Time to Pay’ arrangement

HMRC offers a Time to Pay arrangement, allowing you to spread your tax bill over an agreed period through instalments, rather than paying the full amount at once. For Self Assessment bills up to £30,000, this can often be set up online, without speaking to anyone, provided you meet certain conditions (your return must be filed, you must have no other payment plans or debts with HMRC, and you must set it up no later than 60 days after the payment deadline).

Why setting this up before 31 January matters

Arranging a Time to Pay plan before the deadline (or very shortly after) avoids the first late payment penalty that would otherwise apply at 30 days, even though interest still accrues on the outstanding balance throughout the arrangement. Waiting until well after the deadline to contact HMRC means the penalty clock has already started, and you’ll typically owe more than if you’d arranged the plan promptly.

What a Time to Pay arrangement actually involves

• Interest continues to accrue on the outstanding balance throughout the arrangement - this isn’t a penalty-free pause, but it does stop the more punitive late payment penalties from being added.
• You propose a realistic monthly amount based on what you can actually afford, and HMRC assesses whether this is acceptable given the size of the debt and your circumstances.
• Missing an agreed instalment can cancel the arrangement, reverting you to the standard penalty and enforcement process - so it’s important to only commit to an amount you’re confident you can sustain.

If your bill is for more than £30,000, or the online process doesn’t fit your situation

For larger bills, or more complex circumstances, you’ll need to contact HMRC directly (by phone) to discuss a Time to Pay arrangement rather than using the automatic online service - this can take longer to arrange, which is another reason to start the process well before the deadline rather than at the last minute.

Why this connects to payments on account

If you’re also due to make a payment on account toward the following year’s tax bill (typically due at the same 31 January deadline, with a second instalment on 31 July), and you know your income has genuinely fallen since the previous year, you can apply to reduce your payments on account - this is different from Time to Pay, and worth checking if your circumstances have changed, since paying based on a prior, higher-income year when your actual current income is lower simply ties up money unnecessarily until you claim it back.

What not to do

• Don’t ignore the bill and hope it resolves itself - HMRC’s enforcement powers are considerable, and interest and penalties compound the longer it’s left unaddressed.
• Don’t use high-cost credit to pay a tax bill without comparing it against a Time to Pay arrangement first - HMRC’s Time to Pay interest rate is often more favourable than short-term commercial borrowing, particularly high-cost credit (see our dedicated article on payday loans and high-cost credit).
• Don’t delay filing your return even if you can’t pay - the late filing penalty is separate from and additional to the late payment penalty, so filing on time (even without paying) avoids at least one set of penalties.

The bottom line

If you can’t pay your Self Assessment bill in full, contacting HMRC before or very shortly after the 31 January deadline to arrange a Time to Pay plan is almost always better than missing the deadline silently - it avoids the first late payment penalty and gives you a structured, manageable way to clear the balance.