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Can I pay my tax bill monthly?

If you pay tax under self-assessment, it can sometimes be difficult to ensure you have enough money to pay HMRC when the payment deadline arrives. It can be a good idea to put money aside regularly to pay your tax.

Here I’ll explain how HMRC budget payment plans work and how these can ease the stress of facing a large tax bill.

So, what is a budget payment plan?

A budget payment plan is a regular payment arrangement with HMRC towards your future tax bill. It’s  similar to making a monthly direct debit payment towards your utility bills – the idea is broadly the same. HMRC allows you to choose how much you pay and how often.

Sadly, this does not mean you get to choose how much tax you pay! It just means you get to choose how much money you want to put towards your future tax liability. If the amount paid under the budget payment plan is less than your actual tax liability, then you will have to pay the remaining balance of any tax by the normal deadline.

Unfortunately, HMRC do not pay interest on tax paid in advance of the due date under a budget payment plan.

How do I setup a budget payment plan?

You can set one up either online or over the phone. You will need to have an online HMRC personal tax account to set up a budget payment plan online.

When you access your online tax account, there are a series of links down the right-hand side of the screen. Click on the link that says ‘Direct Debit payments’. Then follow the instructions for setting up the direct debit. Towards the end of the process you will be asked to confirm if you wish to make a single payment or a budget payment plan. You can then go on to confirm how much you want to pay and how regularly, and can also provide a start and end date for payments.

If you do not have access to your tax account, you can set up a budget payment plan over the telephone by calling HMRC’s self-assessment payment helpline. Their phone number is on their website here: 'HMRC-self-assessment contact details'.

What happens if I can no longer afford my regular payments?

Then there are 2 options open to you:

1. You can pause payments under your budget payment plan for up to six months if you need to.


2. You can also simply cancel the arrangement at any time if it is no longer affordable.

Though, it is important to remember that the tax liability itself is not optional, as this will still be due by the normal payment date.

If I’m late paying my tax, can I use a budget payment plan?

Unfortunately, no you can’t. Budget payment plans are only available for future tax liabilities. If you are behind with paying your tax, then you will need to bring this up to date before you can set up a budget payment plan.

You may, however, instead be able to agree a time to pay arrangement with HMRC to help you catch up and then look at a budget payment plan in the future. 



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