For many people, January brings with it an important annual deadline: Self Assessment. By 31st January, those who qualify must file their Self Assessments with HMRC, with payments due the same day and again on 31st July.

With this in mind, it’s wise to put aside money each month to ensure you can pay your Self Assessment when the tax deadline arrives, or even pay your self assessment early. But, sometimes, that’s easier said than done.

For example, if you’ve come to self-employment from an employed role, you might not be used to organising your own tax, as it would previously have been removed from your income before the money hit your bank. The pressures of the festive period can also mean that January might arrive and you find yourself without the funds you need to pay your Self Assessment bill. 

In this guide, we’ll explore what your options are if you find yourself in this unfortunate situation. 

What if you can’t pay your Self Assessment bill?

If you miss the deadline, it’s crucial to understand that HMRC applies separate penalties for filing your tax return late and for paying your tax bill late. 

Late filing penalties:

These apply even if you don’t have any tax to pay.

• Immediately: You'll receive a £100 penalty if your tax return is even a day late.
• After 3 months: HMRC will charge a daily penalty of £10, for up to 90 days (a maximum of £900).
• After 6 months: You'll face a further penalty of 5% of the tax you owe or £300 (whichever is greater).
• After 12 months: Another penalty of 5% of the tax due or £300 (whichever is greater) is applied.

Late payment penalties:

These are charged on top of any late filing penalties.

• Interest: HMRC charges interest on unpaid tax from the day it is due (1st February) until it is paid.gov.uk
• After 30 days: You'll be charged 5% of the tax you owe.gov.uk
• After 6 months: An additional 5% penalty is applied to any tax still outstanding.gov.uk
• After 12 months: A further 5% penalty is charged on the remaining unpaid tax

So, as you can see, late payments should be avoided at all costs - especially if you are already struggling to pay the existing bill. 

Hindsight is 20:20, so by working with an experienced accountant like Crunch, you can accurately budget for your Self Assessment payments. But, if you’re currently facing a Self Assessment bill you can’t afford, then keep reading to find out more about your options. 

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Understanding Your Self Assessment Tax Bill

Self-assessment is the name for the process of filling out and filing an SA100 form. An SA100 is an eight-page tax form that you must complete if you are eligible for Self Assessment. The form covers all forms of income, including director’s salary, dividends, interest, pensions, annuities and state benefits.

You can also include information about gift aid and charitable contributions to help calculate tax offsetting. And finally, the SA100 works to resolve issues around previous over or under-payments and tax refunds.

Who needs to file a Self Assessment?

You must file an SA100 if you meet any of the following criteria:

• Self-employed 
• Company director receiving income from non-PAYE sources
• Employed people with untaxed tips and commissions 
• Landlords and let owners with rental or holiday let income
• People running side businesses 
• People living in the UK earning income overseas
• Sellers who make taxable gains on asset sales

The Self Assessment tax bill is typically split over two payments, with one due on 31st January and the following on 31st July. Your tax is calculated by adding together all of your taxable sources of incoming and deducting any allowable expenses, available capital allowances and/or other allowances, and your personal allowance for the year. The relevant rate of tax is then applied to each income source.

If you are self-employed and profit over £12,570 in a year, then you will also have to pay National Insurance. 

• Class 2 - No longer required. If you earn above the Small Profits Thresholds (£6,845 for 2025/26 tax year and £7,105 for 2026/27 tax year), you’ll still receive National Insurance credits automatically to protect your entitlement to benefits like the State Pension. If your profits are below this threshold, you can choose to pay Class 2 voluntarily.
• Class 4 - 6% on profits between £12,570 and £50,270, and 2% on profits over £50,270.

Directors of limited companies are considered ‘employees’ and must also pay National Insurance on annual income from salary and bonuses over £12,570.

To make sure you have correctly calculated your Self Assessment, including National Insurance or any other taxes, speak to the team at Crunch and make sure you get it right the first time.

Payments on account

One of the most commonly misunderstood parts of the Self Assessment process is payments on account. If your total bill for Class 4 National Insurance and Income Tax exceeds £1,000 per year, and you have not already paid at least 80% of your tax at source, then you will need to make a payment on account. A payment on account is essentially a pre-payment towards your future Self Assessment bill. 

If your total bill for Income Tax and Class 4 National Insurance comes to over £1,000 a year, and you have not already paid at least 80% of your tax at source, your tax bill will state that you need to make a payment on account. This is one additional payment towards next year’s bill on 31st January, followed by another payment on 31st July.

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Navigating financial difficulties: when you can’t pay on time

With the above in mind, there is a lot to consider when it comes to calculating your Self Assessment. Once you have a final figure owed, you will need to organise payment for your January payment, and ensure you have a plan in place to be able to meet your July payment.

So, what if you can’t pay on time? Whether you have failed to save enough money, or have incorrectly calculated your Self Assessment, there may be times when you find yourself unable to pay your tax bills on time. 

If you are unable to pay your Self Assessment bill in full, you can ask HMRC for a Time to Pay arrangement. This allows you to spread the cost into more manageable monthly payments.

Time to Pay arrangements are based on your individual circumstances, including your income, essential living costs, and what you can realistically afford to repay. There’s no fixed formula, but HMRC will aim to agree a plan that is sustainable based on your disposable income.

If you think you may not be able to pay your Self Assessment bill on time, it’s critical that you speak to HMRC to organise a Time to Pay arrangement as soon as possible, as late payment without notification will result in charges. You can access this service by logging into the Online Time to Pay service and submitting an income and expenditure assessment.

Time to Pay is a flexible arrangement, which can be amended overtime depending on your earnings. According to HMRC, over 90% of Time to Pay arrangements are completed successfully.

Alternative payment strategies

While the Time to Pay arrangements are the primary option for those unable to pay Self Assessment, there are a few other approaches to this predicament you may want to consider. 

For example, if you are employed, you can ask your employer to amend your tax code to incorporate the incurred tax and this will increase the tax paid each month to eventually cover what you owe.

If you fail to submit your tax return or submit late, HMRC can issue a determination, which is a formal calculation of the tax due plus a penalty. You then must file your tax return within three years of the due filing date or, if later, within 12 months of the determination date.

If you fail to file a tax return within this time, the tax charge raised by the determination stands, including any charges, penalties and interest. The raising of a determination should be avoiding where possible, as it will enable to the HMRC to commerce further formal proceedings to recover late tax in the future 

Whatever your situation, speak to the team at Crunch to make sure you are choosing the right solution for you and help avoid any situations like this in the future. 

Dealing with HMRC: Payment Plans and Contacting for Support

If you have any doubts about paying your Self Assessment, taking a proactive approach is essential to minimise additional charges. You can set up a payment plan with HMRC either through your accountant or directly via their Time to Pay service. For guidance on making changes to your return, check out this guide on how to amend your self-assessment tax return.

For Self Assessment taxpayers, you can set up a payment plan online if:

• The debt you owe is £30,000 or less.
• You do not have other payment plans or debts with HMRC.
• Your tax returns are up to date
• You contact them within 60 days of the payment deadline

If you don’t meet one or more of the able criteria, you will need to contact HMRC directly to determine whether you qualify for monthly instalments. 

Understanding penalties and interest

In this guide, we’ve already touched on the risks of failing to file and/or pay your Self Assessment with HMRC. The biggest concern is the raising of interest and late payment penalties, which may make it even more difficult for you to pay your bill.

There is a late filing penalty of £100 if your tax return is up to three months late. If you file even later or if you fail to pay, there may be additional charges. 

There is also interest against late payments. So, as soon as you realise you may not be able to pay your bill, you should speak to your accountant or contact HMRC via its online Time to Pay system. 

HMRC also offers a penalty calculator for Self Assessment tax returns that are more than three months late. 

You may be able to appeal against a penalty if you have a reasonable excuse. Browse a list of example “reasonable excuses” on the HMRC website. 

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Your rights and seeking advice

If you think you have been treated unfairly by HMRC, for example you don’t agree with Time to Pay calculations or feel strongly that you have a reasonable excuse, then you have the right to complain and/or appeal any HMRC decision. 

To learn more about complaints and appeals, visit the HMRC website. Alternatively, you can opt to contact them directly on their Self Assessment helpline with any questions. However, this helpline is notoriously busy in the run up to tax season and so it might be best to get professional support from an online accountant (like Crunch) who is familiar with HMRC processes.

Unable to pay your Self Assessment? Get advice today

The best way to avoid late payment penalties and stress is to pay your Self Assessment on time. But if that’s not possible, the key is to act quickly and make arrangements that work for both you and HMRC.

If you’re worried about paying, get in touch with Crunch. We’ll help you understand your options, choose the right payment route, and create a plan to prevent future late payments.

Working with a knowledgeable accountant ensures your calculations are accurate and your payments are managed correctly. Don’t try to navigate it alone. With expert support from Crunch, you can rest easy knowing there won’t be any unwelcome surprises in January or July.