The short answer
- If you can't pay on time, it's possible to contact HMRC before the deadline to ask about a payment arrangement. Your accountant can advise on your own situation.
- An accountant can check whether the figures are right, because a bill can sometimes be wrong or reducible.
- Some businesses borrow to pay tax. The cost of borrowing can be compared with the cost of HMRC interest and any payment arrangement.
- Many businesses set money aside regularly for tax so a bill doesn't come as a surprise.
An unexpected tax bill can land at the worst moment. Whether it's VAT, corporation tax or your own self-assessment, the deadline doesn't move just because the cash isn't there.
The good news is that you usually have more options than it feels like at 2am.
First: check it's right
An accountant can check that the figures are correct, claims and allowances are included and the bill reflects what you actually owe. Mistakes happen, and sometimes a bill can be reduced.
Second: HMRC payment arrangements
If you can't pay in full by the deadline, it's possible to contact HMRC before the deadline passes. They may be able to agree a payment plan in some situations, and it can be easier to arrange ahead of time than after the date has been missed. Check the current options on GOV.UK, as rules and eligibility can change.
Third: weigh the cost of each route
You have a few ways to cover the gap, and they cost different amounts:
- Pay it from existing cash or savings, if you have a buffer.
- Agree a payment arrangement with HMRC, if available. Interest may still apply.
- Borrow to pay it. Whether this makes sense depends on how the cost of borrowing compares with the interest and penalties of paying late.
- Release cash tied up elsewhere, such as unpaid invoices. See customers paying late.
Whichever route is used, it helps to compare the total cost and to consider whether repayments are affordable alongside other commitments. For the wider picture, see our guide to getting a business loan in the UK.
Avoiding a surprise next time
Many businesses move a set percentage of each payment into a separate tax account when the money comes in, and review the figures with their accountant a few times a year. Treating tax as a cost paid as you go, instead of a lump found later, takes some of the pressure out. How much to set aside depends on your own circumstances, so ask your accountant.
Getting help comparing
If borrowing is part of your plan, we can help you see the options. We're a commercial finance broker, not a lender. We introduce your business to the lenders on our panel so you can compare without approaching each one yourself. It's free to check, and any fee is confirmed before you proceed.
You can check your options in a few minutes, with no obligation. This guide is general information and not tax advice, so please speak to your accountant about your own situation.
Common questions
- What happens if I can't pay my tax bill on time?
- HMRC can charge interest and penalties on late payments. It's possible to contact HMRC before the deadline to ask whether a payment arrangement is available, and an accountant can advise on your own situation.
- Can I borrow to pay a tax bill?
- Some lenders will fund this. The cost of borrowing can be compared with the cost of HMRC interest and any payment arrangement. An accountant can help with that comparison.
- How can I avoid a surprise tax bill?
- Many businesses set aside a percentage of every payment into a separate account and review their figures with their accountant a few times a year.
Check your options
Takes a few minutes. Free to check, no obligation.
Check my optionsThis guide is general information for UK businesses. It is not financial advice, and business funding must be repaid. Kapitl Business Finance Limited is a commercial finance broker, not a lender; all funding is subject to eligibility and credit assessment.