TTF Tackles the Money Monster under your bed: Unexpected tax bills

“I’ve just received my Self-Assessment tax bill, and to be honest, it’s really overwhelming. With the cost of living going up and trying to keep up with my other expenses, finding the money to cover this tax bill feels impossible right now. I’ve heard about possible penalties if I don’t pay on time, but I’m not sure what my options are.

Do I set up a payment plan, or is there something else I can do to avoid getting into more trouble? I feel stuck and unsure of what the next steps should be.”

Firstly, take a deep breath—you’re not alone in this, and there are steps you can take to manage your Self-Assessment tax bill, even if it feels overwhelming right now. It’s easy to feel anxious when you’re faced with a bill you can’t immediately pay, but the key is to take action quickly and not let it snowball into a bigger issue.

Here’s what you can do:

Yes, you are right. If you’re unable to pay your tax bill on time, you may be able to set up a Self-Assessment payment plan with HMRC. As long as you owe less than £30,000, have filed your latest tax return, and are within 60 days of the payment deadline, you can usually arrange a plan online. This allows you to spread the cost in manageable monthly payments based on what you can afford after covering essential expenses like rent, bills, and food.

Remember, HMRC will charge interest on the unpaid amount, so it’s not an interest-free loan, but it’s a lot better than falling into arrears. They’ll ask for details of your income, outgoings, and any savings or investments you might have, so try to be prepared with that information when setting up the plan.

What if you’re unsure about the payment plan or can’t set it up online?

No worries—just reach out to HMRC directly. They’ll work with you to find a solution that fits your situation. Missing a payment or not contacting them could lead to debt collection actions, but as long as you communicate with them, you’ll be able to avoid these extreme measures.

The good news is that you’re taking the right steps by addressing this now. If your circumstances change, your payment plan can be adjusted, so it’s a flexible option to help you get back on track.

If you’re unsure or need more personalised advice, don’t hesitate to reach out to us at The Tax Faculty. We can walk you through the process and help ensure you’re managing your tax affairs in the most stress-free way possible. Remember, the first step is often the hardest but its essential you take it for your own future peace of mind.

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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