HMRC time to pay vs personal loan

N1coz

Hi!
I’m struggling to afford my income tax bill. Would I be better off using the HMRC’s time to pay service or take out a personal loan at roughly 6.9% interest? 

MorningcoffeeIV

It depends on how long the arrangement would last and any penalties and interest applied.

MattMattMattUK

The repayment rate of interest from HMRC is 2.5% so it is considerably cheaper than the 6.9% commercial loan. The HMRC repayment rate is also not subject to a credit check, although they will expect you to show costs and income and contribute 50% or more of your disposable income.

https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates
https://www.gov.uk/guidance/find-out-how-to-pay-a-debt-to-hmrc-with-a-time-to-pay-arrangement

MalMonroe

Hi, and also - don't forget MSE's stance on loans: 'borrow as little as possible, repay as quickly as possible'.

As MattMattMattUK says, it makes sense to take the HMRC time to pay offer. 

TripleH

If you take the HMRC option, contact them before it's due to discuss repayment (not many days left to do this).

They tend to be helpful if you contact before the due date for money to be paid over but less so after the due date.

razord

MattMattMattUK said:

The repayment rate of interest from HMRC is 2.5% so it is considerably cheaper than the 6.9% commercial loan. The HMRC repayment rate is also not subject to a credit check, although they will expect you to show costs and income and contribute 50% or more of your disposable income.

https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates
https://www.gov.uk/guidance/find-out-how-to-pay-a-debt-to-hmrc-with-a-time-to-pay-arrangement

That's if HMRC owe you money, not if you owe them money.

For money you owe HMRC, it's 6% (until interest rates rise this week when it'll likely be 6.5%)