By Lynne Gowers on 10th February 2017

5 Things to know if you can’t pay your self assessment tax bill

self assessment tax

HMRC’s annual deadline for payment of self assessment tax is 31st January. This is also the payment date for the first payment on account, if that applies to you.

But what if you are faced with a high, possibly unexpected personal tax bill which you just can’t cover?

Thousands of people every year find themselves in this stressful situation and it can be tempting to bury your head in the sand. Don’t! The sooner you take positive steps to put things right, the sooner you’ll be back on track with HMRC.

Here to help is Andy Runham, Boox in-house self assessment guru, with 5 top tips for anyone who finds themselves caught in this situation.

1. Submitting your self assessment tax return on time is a good first step

Even if you know that you will not be able to pay your personal tax bill by the payment deadline, it is still important to submit your return on time. It shows you are willing to sort out your tax affairs and puts you in a better position to negotiate a payment plan with HMRC.

2. There’s breathing room before a payment penalty

Although the official payment deadline is 31st January, normally HMRC do not apply a payment penalty for non-payment until 30 days after that date, so in most cases you have an extra month until penalties are applied. The payment penalty is 5% of the tax owed, so on a £5,000 overdue tax bill, HMRC will add a £250 penalty after 2nd March 2017.

3. HMRC will charge interest from Day 1

Although you are likely to get a month’s grace on the payment penalty, you will start incurring interest on what you owe from when you miss the deadline. This is charged at a rate of 2.75% per annum. Using our previous example of a £5,000 tax bill, HMRC equates this to approximately 37p a day interest. If you don’t pay for 4 months you would be looking at accrued interest of approximately £45.

4) You can work it out with HMRC

If you have submitted your self assessment return, but are struggling to come up with the tax you owe, you may be able to agree a payment plan with HMRC. This is where you set up a manageable payment plan and make regular payments to HMRC to pay off your debt. Such arrangements are at HMRC’s discretion, but if your circumstances are genuine they may well agree to a payment plan. Once you are on a plan, HMRC will not charge you payment penalties, unless you miss a payment, but will continue to charge interest. To discuss setting up a payment plan, call the HMRC Self Assessment Helpline on 0300 200 3310 and have your NI number and UTR to hand.

5) You can make payments throughout the year

It is important to remember that although the deadline for full payment is 31st January, it doesn’t mean you have to pay it all in one go. There is no special reference you need to give to show what year’s tax you are paying for, so even making small payments over the year will help to chip away at your total tax debt (just make sure you use your tax reference so they know whose money it is).

Let Boox help

We hope you find these tips useful and they help you realise that an unpaid tax bill is rarely insurmountable.

For further help understanding and dealing with your personal tax situation, Contact the Boox Self Assessment Team.

Lynne Gowers Written by Lynne Gowers

Was this article helpful?


Although we attempt to ensure that the Information contained in this publication is accurate and up-to-date at the date of publication it may not be comprehensive, we accept no liability for the results of any action taken on the basis of the information they contain and any implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement and accuracy are excluded to the extent that they may be excluded as a matter of law.

Share this blog

Download our
FREE guide

Our handy guide to claiming expenses through your limited company looks at what you can and can’t claim tax relief on through your company

Please enter a First Name

Please enter a Last Name

Please enter a valid Email Address

Please enter a valid Mobile/Phone Number

Data protection: We take data very seriously and will not share your details with anyone else. If you wish to receive marketing communications from Boox please tick this box.

You can change your preferences at any stage by clicking on the 'Manage my preferences' link at the bottom of our emails. By continuing, you agree to our Privacy Policy.

How would you like to receive communications?


Select Yes or No


Select Yes or No


Select Yes or No


Select Yes or No
Please Verify Captcha

View our latest blogs

Take a look at our recent blogs below.

We’re here to help

Discuss your business and accountancy
needs in detail with our friendly team with
absolutely no obligation.

Call our friendly team on 0808 168 0422 or

Request a call back

(Open 8.30am to 5.30pm Monday to Friday)

Emily Ewin New Client Manager
Emily Ewin New Client Manager