A tax bill that cannot be paid on time needs early attention, because HM Revenue and Customs (HMRC) has wide collection powers. This guide summarises two GOV.UK pages: “If you cannot pay your tax bill on time” and HMRC’s guidance on what will happen if a tax bill is not paid, last updated on 4 September 2026. HMRC’s powers differ between England and Wales, Scotland and Northern Ireland, and the differences are noted. It is general information, not tax or legal advice.
Contact HMRC first
HMRC says that if a taxpayer cannot pay in full and on time, it can work with them to find a way to pay as quickly as possible in a way that is affordable. Before it takes action, except where it suspects fraud or criminal activity, HMRC states it will try to make contact to discuss the situation and agree a way forward. Anyone contacted should reply promptly so that HMRC knows they need support and are not refusing to pay. The Payment Support Service is the route for people living in the UK. Where a taxpayer disagrees with the amount, the guidance also says to contact HMRC. How a tax bill fits among other debts is covered in the guide to priority and non-priority debts.
How a payment plan works
GOV.UK says a person who cannot pay an overdue bill in full may be able to set up a payment plan of monthly instalments, using an online service where eligible. The person needs the relevant reference number, UK bank details with Direct Debit authority, and details of income and spending. If no affordable plan can be agreed, HMRC asks for payment in full. If there are savings or assets, HMRC expects them to be used to reduce the debt as far as possible. An independent adviser’s Standard Financial Statement is accepted as evidence of income and spending.
The monthly amount is based on what remains after rent, food, utility bills and fixed outgoings, and GOV.UK says the person is usually asked to pay around half of that surplus. There is no time limit on a plan. Pension income counts as income, but the value of a pension pot is not counted as savings. If a payment is missed, HMRC will contact the taxpayer and, where possible, try to rearrange the plan. Interest on late payment is charged at the Bank of England base rate plus 4% from 6 April 2025, according to HMRC’s interest rates page, and GOV.UK notes that paying faster reduces the total interest. The current figure should be checked on that page.
Collection through offsets, tax codes and agencies
HMRC states that where there is a debt it may agree a Time to Pay arrangement, use overpaid tax that would normally be refunded to clear other tax debts, or adjust the tax code of a person on PAYE income. Through a tax code it can collect up to 50% of gross income, spread equally across the months available. If a person does not respond, HMRC says it may visit a home or business address to discuss the position, or use a debt collection agency. An agency working for HMRC will contact the person only by letter, text message or phone and never visits a home or workplace.
Enforcement powers as a last resort
HMRC says its enforcement powers are used if it cannot make contact, the person refuses to pay, or a collection agency returns the debt, and describes them as a last resort that differ between nations.
- Taking control of goods (England and Wales). HMRC first issues a formal notice of enforcement costing £75, then visits between 6am and 9pm. Fees are £235 for taking control plus 7.5% of the debt above £1,500, or £110 plus the same percentage for goods removed and sold at auction. Items essential for security and wellbeing are never taken. Northern Ireland uses distraint, and Scotland uses a summary warrant.
- Direct recovery from bank accounts (England, Wales and Northern Ireland). HMRC says this applies when someone owes £1,000 or more and has enough in accounts to cover the debt and reasonable living costs.
- County court action. Charging orders over property, attachment of earnings orders and third party debt orders, which apply in England and Wales only. HMRC says it will not ask a person to draw on pension pots to pay.
- Insolvency. Bankruptcy or winding up is a final course of action, considered only after other recovery options. See applying for bankruptcy.
Help and complaints
HMRC points to free independent debt advice on the MoneyHelper website, and the free debt advice guide covers the options. A taxpayer can nominate an agent, friend or family member to deal with HMRC. GOV.UK says HMRC’s decision on a payment plan cannot be appealed, but a complaint can be made about how a person was treated.
FAQs
Do I have to pay the whole bill at once?
Not necessarily. GOV.UK says a payment plan in monthly instalments may be available, and HMRC will assess whether it is affordable.
Will a debt collection agency visit my home?
No. HMRC says agencies working for it contact people only by letter, text message or phone.
Can HMRC take money straight from my bank account?
In England, Wales and Northern Ireland, HMRC says it can do so for debts of £1,000 or more where the person has enough funds to cover the debt and reasonable living costs, with safeguards.
The bottom line
A tax debt that cannot be paid on time is best dealt with by contacting HMRC at once, since HMRC states it will try to agree a way forward before enforcing, and a Time to Pay plan in monthly instalments is often available. Interest continues on late payment at base rate plus 4%, and enforcement powers such as taking control of goods, direct recovery from bank accounts and court orders differ between the UK nations and are described as a last resort. Free debt advice can help prioritise tax among other debts. This is general information, not tax or legal advice.
Sources
- If you cannot pay your tax bill on time (gov.uk)
- What will happen if you do not pay your tax bill, HMRC guidance last updated 4 September 2026 (gov.uk)
- HMRC interest rates for late and early payments (gov.uk)