I can’t afford my payment on account Self Assessment tax bill – what are my options?

What to do if you cannot afford your Self-Assessment bill in Scotland

If you are self-employed or have income outside PAYE, you may be familiar with HMRC’s Self Assessment payment on account system. Twice a year—31 January and 31 July—applicable taxpayers – such as self-employed sole traders – are required to make advance payments towards their annual tax bill.

For those already struggling with rising costs, these large lump sums can feel overwhelming. If you can’t afford your Self-Assessment payment on account, it’s important to know you’re not alone, however, you do need to take steps to solving your HMRC debt problems.

What is a payment on account?

Payments on account are advance payments towards your next year’s tax bill. HMRC calculates them based on your previous year’s liability. You usually make two instalments:

• 31 January – your first payment on account (plus any balancing payment due)
• 31 July – your second payment on account

The idea is to spread the cost of your tax bill, but for many self-employed workers, it can actually create cashflow problems rather than solve them, especially if income has dropped since the last tax year.

This may be appropriate if your business income has dropped, if you’ve had fewer clients or contracts, or if you’ve experienced illness or other setbacks. HMRC will typically ask for proof of your altered situation so you must be prepared to supply this. While reducing your payment could be a great way of improving your cash flow, you should be aware that if you reduce too much and end up underpaying the tax due, HMRC will add interest on the shortfall.

• Seek professional debt advice

For some, struggling with Self Assessment payments is a sign of wider financial difficulty. If tax arrears are just one of several debts such as credit cards, loans, or overdrafts that you have, it may be time to take debt advice and consider a formal debt solution.

In Scotland, options include:

Trust Deed

A Trust Deed is a legally binding agreement between you and your creditors. You make affordable monthly payments (usually over 4 years) and any unaffordable unsecured debt may be written off at the end. You can include both personal debts as well as debts which have accrued from your sole trader business such as HMRC tax bills.

Debt Arrangement Scheme (DAS)

A Debt Arrangement Scheme is a government-backed debt repayment plan. You repay what you owe in full, but at an affordable rate and without interest or charges being added. HMRC debts can usually be included.

Both options stop creditor pressure and provide structure, helping you regain control of your finances.

How Scotland Debt Solutions can help

Ignoring your Self Assessment tax bill won’t make it go away, in face, the added interest and penalties will only make the problem worse. Whether you set up a payment plan with HMRC, reduce your payment on account, or consider formal debt solutions, the key is to act at an early stage.

At Scotland Debt Solutions, we specialise in helping people across Scotland deal with tax debts and wider financial struggles. If you can’t afford your payment on account, we can talk you through all your options, from HMRC support to formal debt plans like a Trust Deed or DAS. Contact us today for immediate help and advice.