Self Assessment 2025: what to do if you can't pay your tax bill

After being hit by a £2,500 larger-than-expected tax bill, Katy Ward explores the options for anyone struggling to pay HMRC.

Despite being a personal finance journalist for more than 15 years, I am pretty relaxed when it comes to my taxes.

Perhaps incredibly disorganised would be a more accurate description…

Like 5.4 million people in the UK, I had yet to complete my return until a few days ago (with the help of an accountant).

I foolishly assumed my bill would be around the same level as last year (£2,000), despite earning (a little) more this year.

7 tips to make filing your tax return as painless as possible

Bill shock

However, these additional earnings meant my tax bill would be nearer £4,500.

This was £2,500 I hadn’t budgeted for… I certainly don’t remember having (or enjoying) this extra money.

While my family can technically afford to pay the bill, it will mean scrimping and saving over the next 12 months.

It also made me think about those hit with an unexpected bill who simply can’t meet the cost.

So, what should you do if you’re hit with a hefty bill from HMRC that you can’t afford to repay?

1. Contact HMRC

If you’re struggling with your bill, contact HMRC as your first port of call.

Doing so demonstrates you’re willing to resolve the issue.

If you owe less than £3,000 and are employed or receive a company pension, HMRC can adjust your tax code to collect the debt through your earnings.

The best and quickest ways to contact HMRC

2. Understand penalties

If you can’t pay your bill on time, it’s essential you understand any penalties you might need to pay.

If you miss the 31 January online filing deadline, you’ll automatically face a £100 charge.

However, charges may be higher if your return is more than three months late.

You’ll also need to pay interest on late payments.

You can read more about penalties on the Government's website.

However, you may be able to appeal a penalty if you have a ‘reasonable excuse’ for late filing.

You can read more about 'reasonable excuses' below.

3. Reasonable excuses

While HMRC tends to take a pretty grim view of missed deadlines, there are some legitimate reasons for a late filing.

Admittedly, my reason was pretty weak. I had taken my eye off the ball. But what about legitimate reasons for filing a late return?

According to HMRC, there are numerous acceptable reasons for filing for a late return.

 These include:

• The death of a partner or another close relative shortly before the deadline
• An unexpected hospital stay
• A serious or unexpected life-threatening illness
• Computer or hardware issues while you were preparing to file
• Issues with HMRC online services
• Postal delays
• A fire or flood
• Delays relating to a physical or mental health issue
• You relied on someone else to complete your return, and they failed to do so

4. Setting up a payment plan

If you can’t pay your bill, you may also be able to set up a repayment plan with HMRC.

To do so, you’ll need:

• Relevant reference numbers
• Your bank account details
• Details of missed payments

You may be able to set up a repayment plan online, depending on your debt type.

If you’re paying by Self-Assessment, you can set up a payment plan if you meet the following criteria:

• Have filed your latest tax return;
• Owe £30,000 or less;
• Are within 60 days of the payment deadline;
• Don’t have any other repayment plans with HMRC.

Surprising things you can claim on your tax return

Have your say

Have you ever been hit with a higher-than-expected tax bill? Or perhaps you (quite reasonably) think I am a fool for miscalculating my bill.  

Do you have any tips for staying on top of your tax liability?

We’d love to hear your comments below.