Got a tax bill due 31 January and can’t pay it all at once?

A big Self Assessment bill can sting. The good news: if you can’t pay everything by 31 January, there are official ways to spread the cost, plus a few funding routes that can help you stay on top of things.

The right option depends on:

• whether you’re self-employed or a limited company director

• how much you owe

• whether you can clear it quickly, or need longer

HMRC Time to Pay (TTP)

A Time to Pay arrangement is HMRC’s formal instalment plan. It lets you spread overdue tax over monthly payments (often up to 12 months, sometimes longer in exceptional cases).

When it’s a good fit

• You can’t pay in full by 31 January

• You can afford manageable monthly payments

• You’re ready to share a clear picture of your income and essential outgoings

What to expect

• HMRC will ask what you can realistically afford and may want evidence.

• Interest usually applies while the balance remains unpaid.

• Your plan can be refused (or cancelled) if you miss payments or don’t keep HMRC updated.

Gold Stag tip: If you know you’ll struggle, act early. HMRC are generally more open to a sensible proposal than a last-minute panic.

HMRC Budget Payment Plan - prevent next January’s panic

If you’re up to date and want to plan ahead, a Budget Payment Plan lets you pay weekly or monthly by Direct Debit towards your next Self Assessment bill.

Why freelancers like it

• it smooths out uneven income

• it turns a scary deadline into a steady monthly habit

Watch-outs

• you choose the amount, so it needs reviewing if your income changes

• you won’t earn interest (some people prefer saving into a separate “tax pot” account)

Freelancing through a Ltd company
Don’t mix personal vs company tax

If you run through a limited company, your 31 January bill is usually your personal tax position (dividends, other income, etc.). But your company may also have separate liabilities like:

• Corporation Tax

• VAT

• PAYE (if you run payroll)

Time to Pay can apply to some business taxes too but HMRC may want more detail (like bank statements and cashflow forecasts) to confirm the business is viable.

Gold Stag tip: Before choosing a plan, make sure you’re tackling the right tax in the right place (personal vs company).

Tax loans / tax funding - pay HMRC now, repay monthly

Tax funding is a commercial loan used to clear a tax bill and then repay the lender over an agreed term.

When it can work well

• you want to pay HMRC on time (and reduce hassle)

• you need predictable monthly payments

• you can pass affordability checks

What to check before signing

• APR and fees (what you’ll repay in total)

• early repayment charges

• lender/broker reputation and terms

Gold Stag note: This is ordinary borrowing; it’s not the same as “loan schemes” marketed for tax avoidance purposes (which can cause serious problems).

The trusty credit card (with a plan)

A credit card can bridge a short-term gap if you can realistically pay it off, especially during a promotional 0% period.

Good for

• short-term cashflow timing issues

Be careful of

• high APR once the promo ends

• using minimum payments as the long-term solution