The short version
- File your tax return anyway, by 31 January. Not being able to pay is no reason to file late: the late filing penalty (£100 straight away) is separate, and you can't set up a payment plan until you've filed.
- Owe £30,000 or less? You can set up a payment plan (Time to Pay) online, without phoning HMRC.
- Interest runs on anything unpaid from 1 February, plan or no plan.
- If the balancing payment is still unpaid after 2 March 2027 and you haven't asked for a plan, HMRC adds a 5% penalty, and more 5% penalties at 6 and 12 months.
- Ask for the plan before then and keep to it, and those penalties aren't charged.
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What not paying on time costs
Two separate charges, both on the 2025/26 bill due 31 January 2027:
| If still unpaid | Charge |
|---|---|
| From 1 February 2027 | Interest, every day, on everything unpaid (the balancing payment and any payment on account) |
| After 2 March 2027 (30 days) | Penalty: 5% of the balancing payment still unpaid |
| After 2 August 2027 (about 6 months) | Another 5% of what's still unpaid |
| After 2 February 2028 (about 12 months) | Another 5% of what's still unpaid |
The penalties are only on the balancing payment: a late payment on account gets interest, but not the 5% penalties. Filing late is a different penalty again, starting at £100 (see our late penalties guide).
Example: Priya's first-year bill is £1,800 plus a £900 payment on account. She can't pay until the end of April 2027 and doesn't ask for a plan. She pays a 5% penalty on the £1,800 (£90), plus about three months' interest on £2,700. Had she set up a six-month plan in February, she'd pay no penalty, and interest only on the falling balance.
How a payment plan (Time to Pay) works
- File your return first. HMRC can't set up a plan until it has.
- Online, if you owe £30,000 or less. Use the payment plan service on gov.uk (sign in with your HMRC details). You'll need your UTR and UK bank details, and you must be able to set up a Direct Debit.
- Owe more, or need longer? You can still ask: contact HMRC's Self Assessment payment helpline. They'll ask how much you earn and spend, and what savings you have.
- How much a month: HMRC looks at what's left after rent, food, bills and fixed costs, and usually asks for about half of that. You can offer more; it cuts the interest. If you have savings, HMRC expects you to use them first.
- How long: there's no set time limit. It depends on what you owe and can afford. If things change, you can ask to make the plan longer or shorter.
- Interest still applies. The plan stops the penalties, not the interest.
- Keep to it. If you miss a payment, HMRC will contact you and try to rearrange the plan. If you break it, the penalties it held off can be charged.
If you have a Standard Financial Statement from a debt adviser (for example Citizens Advice), HMRC accepts it as evidence of what you earn and spend.
Other ways to make January smaller
- Pay through your tax code. If you're employed or get a pension, owe less than £3,000 and file online by 30 December 2026, HMRC collects the bill through your tax code over the next 12 months. No interest, no penalty. (Payments on account still need paying the normal way.)
- Reduce your payments on account, if your profits really have fallen this year: online or with form SA303. Don't use it just to free up cash: if the real bill turns out higher, HMRC charges interest on the difference. Our payments on account guide explains it.
- Pay what you can by 31 January. Part payments count. Every pound paid stops interest on that pound, and the 5% penalties are worked out on what's still unpaid.
- Check your figures. Allowable expenses you forgot (selling fees, postage, packaging) lower the bill. For a side hustle, you can choose the £1,000 trading allowance or your actual expenses, whichever is better.
"My account says I have nothing to pay"
Your HMRC online account and statement only show the balancing payment after you've filed. Before that, you may see nothing, or only the payments on account HMRC already knows about. If you file close to the deadline, your statement may not arrive in time: use the tax calculation in your return to see what you owe. Payments on account due last July count towards the bill.
Next year: avoid the January squeeze
- Budget Payment Plan: once you're up to date, you can pay HMRC weekly or monthly by Direct Debit towards your next bill, from your HMRC online account. You can pause it for up to 6 months.
- Set aside a share of each sale. About 30% of profit in a first year with payments on account is a rule of thumb, not a calculation.
- File early. You can file from 6 April. It doesn't bring the payment date forward, but you'll know the January figure months ahead.
- Keep dated records as you go. If you sell on eBay, Vinted, Etsy or Depop, our bookkeeping spreadsheet (£12.99) works out each sale's fees and totals your tax year. It's made by the same people as this site, and it's optional: a free spreadsheet you set up yourself works too.
Free help if money is tight
If you owe other people too, talk to a free debt adviser before agreeing a plan: MoneyHelper (England and Wales), Scotland Debt Solutions (Scotland) or Advice NI (Northern Ireland). Ignoring HMRC is the worst option: it can lead to debt collectors, deductions from wages, or court action. Watch out for scams too: criminals pretend to be HMRC by text, email and phone, so check genuine HMRC contact details on gov.uk before you pay anyone.
More guides: registering for Self Assessment, tax on Vinted, tax on eBay.