Tax and VAT funding
What is HMRC Time to Pay?
By Chris Findlow · 23 August 2026
Time to Pay is HMRC's own instalment arrangement, letting a business spread a tax bill it cannot pay in full. HMRC charges late payment interest on the outstanding balance but no arrangement fee. It is granted at HMRC's discretion and is intended for genuine short-term difficulty.
Time to Pay is HMRC’s own instalment arrangement. It lets a business spread a tax bill it genuinely cannot settle in full, paying it off over an agreed period instead.
We think it belongs on a broker’s website, because for a lot of businesses it is the better answer and there is nothing in it for us.
How it compares to commercial funding
Cost. Time to Pay usually wins. There is no arrangement fee and no broker in the middle, and HMRC’s late payment interest is frequently below commercial lending rates. If cost is your only consideration, start here.
Certainty. Commercial funding wins. HMRC decides whether to grant Time to Pay and on what terms, so you cannot plan around it in advance. A tax loan is agreed before you commit, on terms you can see.
Your record. A tax loan settles the bill in full on the due date, so HMRC simply sees it as paid. Time to Pay is recorded as a payment arrangement against your account. Neither is a black mark on its own, but a pattern of arrangements can affect how HMRC views later requests.
What it is designed for. Time to Pay exists for genuine short-term difficulty. It is not intended as a routine working capital tool, and treating it as one tends to wear out its welcome.
When each makes sense
Time to Pay if you genuinely cannot pay, the difficulty is temporary, and cost is what matters most.
A tax loan if you could pay but would rather not do it in one lump, you want certainty arranged in advance, or you would rather the bill was simply settled on time.
A revolving credit facility if tax is a recurring pinch point rather than a one-off. Arranged once, drawn whenever you need it, no fresh application each quarter.
One thing worth acting on
If you know a bill is going to be difficult, deal with it before the deadline.
Options are much better beforehand. Once you are in arrears, penalties may already be accruing, and any lender you approach can see you have missed a payment. Both Time to Pay and commercial funding become harder and more expensive after the fact.
Speak to your accountant before deciding. This is general guidance, not tax advice.
Written by
Chris Findlow
Director, FundingLinks
Director at FundingLinks with over 15 years across commercial lending, invoice finance and fintech partnerships, including senior leadership roles at Kriya. He works directly with SMEs to match them to the right lender across the whole market.
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