In most cases, yes. Filing and paying are separate obligations, and leaving a return unfiled because the tax looks unaffordable usually makes both problems worse. Filing penalties keep growing, any estimate HMRC makes stays in place, and you cannot agree an instalment plan for a bill that has not been worked out. Filing first turns an unknown debt into a figure you can plan around.
This guide covers that decision and the first steps on payment. Paying late brings its own late payment penalties and interest, separate from anything charged for filing late. HMRC’s December 2025 announcement said almost 18,000 Self Assessment payment plans had been set up online since 6 April 2025, and that a plan cannot be set up until the return has been filed.
Why Filing and Paying Are Separate Problems
Each overdue return attracts its own filing penalties for as long as it stays unfiled, whether or not you can pay. The tax shown on the return carries separate late payment penalties and interest. Shortage of money does not help an appeal either: HMRC’s reasonable excuse guidance lists a payment that failed because you did not have enough money among the things that will not count.
| Position | Filing penalties | Payment side | Payment plan |
|---|---|---|---|
| Return filed, tax unpaid | Stop growing once the return is in; existing charges remain | Late payment penalties and interest on the unpaid tax | Can be discussed with HMRC once the figure is known |
| Return not filed, tax unpaid | Continue under the escalating timetable | Interest and penalties on any tax HMRC has charged | Online plan unavailable while returns are outstanding |
Filing penalties follow a fixed timetable that escalates over 12 months. Filing does not cancel charges already incurred, but it stops the filing clock for that year.
What Happens If HMRC Estimates the Bill?
If a required return is not filed, an HMRC officer can make a determination of the tax due to the best of their information and belief, under section 28C of the Taxes Management Act 1970. The determination is treated as if it were your own self assessment, so HMRC can collect it. It is replaced only when you file the return, and that return must normally arrive within 3 years of the filing date, or within 12 months of the determination if that is later.
A determination is not based on your records, so it can be higher or lower than the real figure. Either way, it is not a reason to wait: recovery action already under way can continue against the tax shown on the return that replaces it.
Establishing the Actual Bill
Before you talk to HMRC about affordability, separate each year’s figures. For every tax year, note the tax on the return, any payments on account, the filing penalties, the payment penalties, interest and anything already paid. A single balance on an HMRC statement can mix all of these, and a claim for expenses or reliefs missed in the original figures can change the tax itself.
- Returns already filed, with their tax calculations and submission receipts.
- Notices to file, penalty letters and any determination notice for the years still outstanding.
- Your HMRC statement, showing payments made and how they were allocated.
- The records needed to prepare each missing return, even if some figures will be estimated.
Contacting HMRC About What You Can Afford
HMRC’s online payment plan service is for people who are up to date with their tax returns, owe £30,000 or less, and have no other tax debts or HMRC payment plans. With several years outstanding, that usually means filing every requested return first, or contacting HMRC by phone if the total is larger or you need longer.
HMRC’s guidance on payment difficulties says it will check whether a plan is affordable, and asks about your income, usual monthly spending, savings, investments and other taxes. It usually asks for around half of what is left each month after essential and fixed costs, and expects savings or assets to be used to reduce the debt. If you have had independent debt advice, it accepts a Standard Financial Statement as evidence. If a plan cannot be agreed, HMRC says it will ask for the amount in full, so no adviser can promise acceptance.
If you joined Making Tax Digital in April 2026
For people required to use Making Tax Digital for Income Tax from April 2026, new late payment penalties apply from the 2026 to 2027 tax year. HMRC says that if a payment plan is agreed and kept to, those penalties are paused from the date you contacted HMRC.
When Independent Debt Advice Is Needed
Get free debt advice before agreeing anything with HMRC if tax is one of several debts, if rent, mortgage or energy bills are already behind, or if nothing is left after essential costs. An adviser can look at all your creditors together, which HMRC and an accountant cannot.
HMRC’s help and advice page points to MoneyHelper in England and Wales, Scotland Debt Solutions in Scotland and Advice NI in Northern Ireland. In England and Wales, the government’s Breathing Space guidance describes legal protection from most creditor action for up to 60 days, entered through a debt adviser, and says tax debts are likely to qualify. Scotland and Northern Ireland have their own debt solutions, so advice should come from someone who works under the rules where you live.
A Practical Order of Work
- 1Open every HMRC letter and list the years, deadlines and amounts mentioned.
- 2Prepare and file the outstanding returns, starting with any year that has an urgent notice.
- 3Work out the real balance for each year from the returns and your HMRC statement.
- 4Pay what you can now, even if it is a small amount, because interest runs on the unpaid balance.
- 5Contact HMRC about a payment plan, online if you qualify or by phone if not.
- 6Get free debt advice if the plan HMRC proposes would leave essential bills unpaid.
- 7Keep up the agreed payments and file the next return on time, so a new balance does not undo the plan.
Help Filing When Money Is Tight
Our late tax return filing service prepares an overdue return from the records you have, and our multiple-year returns service works through a longer backlog year by year. When the figures are known, our Time to Pay support can help prepare the income and spending information HMRC asks for. HMRC decides whether to agree a plan.