Exploring options when you can't pay your personal tax bill

Fulfilling tax obligations is a responsibility that individuals in the UK face annually. However, unexpected financial challenges can arise, making it difficult to meet these obligations on time. If you find yourself in a situation where you can’t pay your personal tax bill in the UK, it’s important to understand the available options to address the issue responsibly.

Communication with HMRC

The first and crucial step is to communicate with His Majesty’s Revenue and Customs (HMRC). Ignoring the issue can lead to additional penalties and interest. HMRC is often willing to work with individuals facing financial difficulties to find a suitable solution.

Time to pay arrangement

HMRC may allow you to set up a Time to Pay arrangement, which enables you to pay your tax bill in manageable instalments. While there may be interest charges, this option can provide much-needed breathing room without exacerbating financial strain.

Offer in Compromise (OIC)

In certain circumstances, HMRC may consider an Offer in Compromise. This allows you to settle your tax debt for a reduced amount, acknowledging financial hardship. However, stringent criteria must be met, and thorough documentation of your financial situation is essential.

Temporary suspension of collection

If you can demonstrate that paying the full amount would cause significant financial hardship, HMRC might temporarily suspend collection efforts. This doesn’t eliminate the debt but provides a short-term reprieve to help you get back on track.

Appealing penalties

You have the right to appeal penalties imposed by HMRC if you can show that your failure to pay on time was due to reasonable cause. While this doesn’t eliminate the tax debt, it can reduce the additional financial burden. 

Borrowing to pay taxes

Consider borrowing money through a personal loan or credit card to settle your tax debt. While interest rates apply, it can prevent further penalties and buy you time to address your financial situation. 

Professional advice

Seeking guidance from a tax professional or accountant is invaluable. They can assess your specific circumstances, provide expert advice, and help you navigate the intricacies of the UK tax system.

Review and amend your tax return

Double-check your tax return for any errors that might be inflating your tax liability. Correcting mistakes can reduce the overall amount owed and prevent future issues.

Facing challenges in paying your personal tax bill in the UK can be daunting, but there are options available to help you navigate these financial difficulties. Proactive communication with HMRC, exploring available arrangements, and seeking professional advice are crucial steps to find a resolution. Remember, addressing the issue promptly is key to minimising penalties and interest, allowing you to regain control of your financial well-being.

If you would like support exploring options available to deal with your tax bill, contact JW Hinks on 0121 456 0190 and speak to our professional team of experts.