HMRC Time to Pay: How It Works and When to Borrow
By Oliver Mackman · Reviewed 2026-04-26
You have a tax bill you cannot pay in full by the deadline. HMRC offers Time to Pay (TTP), staged repayment over months. The question is whether to take TTP or borrow commercially to clear the bill.
What this is
A formal HMRC arrangement letting you pay tax owed across instalments, typically 6 to 12 months. Available for VAT, PAYE, Self Assessment and Corporation Tax. HMRC charges interest on the outstanding balance (4 to 8% range, tracks base rate plus margin).
What happens if you do nothing
Once on TTP, missing a payment can collapse the arrangement and trigger immediate enforcement. Late filing remains a defaulting event. Your credit profile is unaffected for personal borrowing but commercial lenders can ask about TTP at underwriting and may price for it.
Options, in order
- Negotiate TTP directly with HMRC if cashflow recovery is genuinely 6 to 12 months out.
- Compare against a commercial unsecured term loan if the all-in cost is similar and the cashflow stress is shorter.
- Use a VAT loan or short-term bridge to clear the bill, refinance later if needed.
- Consider asset-backed finance if the company owns property or plant.
Which UK lenders engage
- · iwoca for working-capital top-up (12 month term, soft search).
- · Funding Circle for £25k-£500k clean-credit cases with 12 months trading.
- · Specialist VAT-loan lenders for short-term clearance against the next quarter.
- · Allica Bank for asset-backed cases £150k+.
HMRC-specific notes
HMRC will not give you TTP if you have not filed the return. File first, then call. The "Business Payment Support Service" line is the right contact. Be ready with: outstanding amount, why you cannot pay, when cashflow recovers, what you can pay now.
Do not do this
- · Ignore the bill, late-filing penalties stack quickly.
- · Take a personal loan to pay corporate tax (defeats limited liability and is poor commercial practice).
- · Use credit cards to pay HMRC (legal, but the merchant fee plus card APR will exceed any sensible commercial alternative).
When to call an advisor before borrowing
Call your accountant before borrowing if the tax bill exceeds 25% of annual turnover, if you have multiple HMRC debts, or if a previous TTP arrangement has defaulted.
Related
- · All HMRC pressure scenarios
- · Our post-decline routing (if mainstream lenders have declined)
- · After a decline: alternative lenders
Editorial only. We are not an FCA-authorised adviser or licensed insolvency practitioner. For active enforcement action, contact a licensed insolvency practitioner directly.