Self-assessment deadline is looming: What to do if you can’t pay

If you’re self-employed or have an income that hasn’t been taxed, you need to complete and submit a self-assessment tax return, even if you didn’t earn anything.

Missing the deadline can lead to fines, so it’s important to act.

What happens if you don’t file on time?

• you could be fined £100 straight away, even if you don’t owe any tax
• after three months, fines increase to £10 per day, up to £900
• after six months, there is another penalty of £300 or 5% of the tax due, whichever is higher

What if you can’t afford to pay your tax bill? 

If you’re struggling to pay, don’t ignore it.

Submit your return, even if you can’t pay

The most important step is to submit your tax return on time, even if you don’t have the money to pay the bill.

This helps you avoid late filing penalties.

You should also contact HMRC as soon as possible. They can work with you to find a solution, but only if you get in touch. Dealing with the problem early can reduce interest and penalties.

Ignoring HMRC can lead to enforcement action to recover the debt, so it’s always better to be proactive.

HMRC help and support

HMRC may be able to help if you can’t pay your tax bill. The support offered depends on your personal circumstances, so it’s important to talk to them about the best way forward.

You’ll need to contact:

• Payment Support Service, if you live in the UK
• non-UK residents payment helpline, if you live permanently abroad

HMRC may:

• Ask you to set up a Time to Pay arrangement, allowing you to pay in instalments. HMRC will check that the payments are affordable for you. These plans are flexible and can be adjusted if your situation changes.
• Use any tax refund you’re due to pay off other outstanding tax debts.
• Adjust your tax code to collect unpaid tax through PAYE, if you’re employed as well as self-employed.

Reducing payments on account

Payments on account are advance payments towards your next self-assessment tax bill. They are designed to spread the cost over the year.

Payments are made in two instalments:

• First payment: due by midnight on 31 January, along with any remaining tax from the previous year, called a balancing payment.
• Second payment: due by midnight on 31 July.

If you expect your income to be lower than last year, you can apply to reduce your payments on account. This can help you avoid overpaying tax.

Valid reasons might include:

• a drop in profits
• moving into employment where tax is deducted through PAYE

You should only reduce payments if you genuinely believe your tax bill will be lower, as reducing them too much could leave you owing more later.

Need help with your tax return?

Free help and guidance on completing and submitting your self-assessment return is available on GOV.UK.

If you’re feeling overwhelmed, getting support early can make a big difference.