HMRC has announced that the threshold for the online self-serve ‘Time to Pay’ service, which allows tax bills to be paid on a monthly basis, has been increased from £10,000 to £30,000.

This measure has been implemented to help ease financial burdens resulting from the COVID-19 pandemic.

Here we set out a reminder on the requirements and information you will need to provide when applying for a Time to Pay arrangement, depending on whether you qualify for the self-service facility or not.

Time to Pay arrangements for Self-Assessment customers

HMRC’s online Time to Pay facility allows eligible taxpayers to apply to set up a Self-Assessment payment plan online, whereby instalments are made by Direct Debit.

The increase in the threshold from £10,000 to £30,000 means that more Self-Assessment customers can now apply online to spread the cost of their tax bill into monthly payments without the need to call HMRC.

Payments that were deferred from July 2020, and those due in January 2021, could now be spread over 12 months to be settled under a payment plan over the twelve months until January 2022.

The following requirements must be met in order to set up your own payment plan:

  • You have no outstanding tax returns
  • You have no other tax debts
  • You have no other HMRC payments set up
  • Your Self-Assessment tax bill is between £32 and £30,000
  • It is no more than 60 days since the tax was due for payment

As part of the online application, you will be asked:

  • Whether you can afford to pay anything up front
  • How much you can afford to pay each month (note – you are not asked for income or expenditure details)
  • How many months you want to pay over (maximum of 12 months)
  • Which day of the month you want to make each payment

You will need a government gateway user ID and password to set up a payment plan online, but if you don’t already have one you can create one when you set up a payment plan.

Applying for a Time to Pay arrangement for those who do not meet the Self-Assessment requirements

Taxpayers with bills over £30,000, or who need longer than 12 months to pay in full might still qualify for a Time to Pay arrangement, but you will need to contact HMRC on the COVID-19 helpline (0800 024 1222) to discuss this. This will involve a discussion with HMRC regarding your financial position and the amounts you are able to pay.

(If you are experiencing difficulty making payments for reasons other than COVID-19, you will need to contact 0300 200 3835).

Before contacting HMRC you will need to have the following information:

  • Your UTR (Unique Taxpayer reference) or VAT reference number
  • The amount of the tax bill that you are having difficulty in paying
  • How long you will need to make the payment (HMRC will usually limit arrangements to 12 months)
  • Your bank details

You will also be asked to provide the following which will enable HMRC to decide whether you are eligible:

  • Cashflow forecasts and details of your income and expenditure so HMRC can check affordability
  • A statement of assets and liabilities showing details of your assets, savings, investments and outstanding liabilities
  • What steps you have taken to try and obtain the funds to pay the tax liability

If you have any further questions on the threshold extension for Self-Assessment customers, or would like tailored advice on how a Time to Pay arrangement may be suitable for your individual situation, please get in touch with our experts.