Benjamin Franklin once said, “In this world, nothing can be said to be certain, except death and taxes.” If you are in business, a landlord, or paying tax under self-assessment, you understand the importance of paying your tax on time. But what if you can’t afford to pay your taxes when they are due? Remember that you can use the Time to Pay service with HMRC.
What is Time to Pay (TTP)?
A Time to Pay (TTP) arrangement is an option HMRC offers that allows you to pay your tax bill in instalments. This will enable you to make manageable payments to settle any tax arrears.
A typical TTP arrangement lasts six to twelve months and can be used for Corporation Tax, VAT, PAYE, and self-assessment tax bills.
How does TTP work?
A TTP arrangement is when you contact HMRC and ask for time to pay because you are having trouble paying your tax bills as they fall due. Typically, this will also relate to overdue taxes.
HMRC is committed to understanding your situation. They will ask about the challenges you’re facing with payments, your ability to make payments, and your monthly expenses.
You will be able to provide details about your cash flow and affordability. Each tax has different criteria and how much of any overdue amounts that can qualify for the time-to-pay service with HMRC.
Remember that if you have savings, then HMRC will expect you to use these first.
Is TTP easy to get?
If you have been diligent and timely in managing your tax affairs previously, you are likely not to encounter any issues.
That is not to say that if you have been late in delivering your tax returns in the past and have not paid your tax on time, you won’t qualify.
In the end, HMRC is interested in collecting taxes, so they will try to be helpful.
How do I get a TTP arrangement?
Here are more details on Time to Pay arrangements.
- Please ensure you have all the information needed to set up the TTP and meet the qualifying criteria.
- If you find this easier, you can also set up TTP via your online account rather than calling HMRC which can be frustrating at times.
We also think it’s a good idea to consult with your accountant before contacting HMRC.
Is TTP the same as the Budget Payment Plan?
Do you struggle to pay your self-assessment bill each January and July? If so, the Budget Payment Plan is right for you. This is different to TTP.
The budget payment plan lets you pay for your future self-assessment tax bill. You can’t use the plan for the second payment due on 31 July (only two weeks away), but you can set it up for next January.
If you are up to date with your self-assessment payments, you can arrange to pay your tax weekly or monthly. Your payments will be credited towards your next instalment, hopefully preventing a significant tax payment in January.
You can find more on the Budget Payment Plan here, including more details on how to set up the plan.
What if you need more help
If you don’t pay your tax on time, you can be sure HMRC will chase you.
If you are struggling with cash remember to use the Time to Pay service with HMRC.
If you or your business are struggling to pay bills, it’s important to prioritise your overall cash position. We understand that maintaining a positive cash flow can be challenging at times. Regular projections and forecasts are key.
When encountering financial difficulties, it’s essential to be vigilant and look for early signs of insolvency.
Seeking assistance from a professional at an early stage is always a wise decision, as it can help you navigate potential challenges and maintain a healthy cash flow.
We’re as serious about your goals as you are and are here to help you get back on track. If you want to discuss anything further, please email your usual contact at Myers Clark.
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