HMRC debt

thelibrarian11

Please could I ask for some help with a self assessment tax debt? 

I work freelance alongside a full time job, and it's put me into the 40% bracket this year. I didn't put any money away at all to pay the tax, I feel really stupid about this but I just chalk it down to being autistic and not understanding what I'm supposed to be doing in general. I also had underestimated how much I would owe, I've got student loans as well, so even if I had put away the amount it wouldn't be enough. I've been really upset about this debt in particular, I am towards the end of a DMP which is my 2nd one in my life time, I've also had a DRO before, I've been in a cycle of debt forever and it's business as usual for me. This one I've lost sleep over though and I feel like such a twit. I worked so hard, really put the hours in and did a good job, it's just made everything worse!

I can't pay it and I'm thinking I have 2 options: either negotiate a payment plan or get my credit rating up enough to get a loan to cover it, even if it's a poor loan deal. Is it likely they'll let me pay over time with that as my reason for not keeping the money aside? Will I need to clear it in a year? I can't go bankrupt again can I, because I think this debt won't be included, am I right? What's scaring me the most is I have a car worth about 6k that I've nearly paid off, I do need it for work but scared I might have to sell it and get a cheaper one. I can post a SOA if that helps, but it's this debt in particular I don't know what to do about. I think maybe people like me who are self employed with multiple income streams might have help with reducing their tax bill, like advice on deductibles and stuff? This is the social norms sort of stuff that I never understand.

Thanks so much for any advice.

stu12345_2

how to deal with HMRC debt 
https://www.stepchange.org/debt-info/business-debts.aspx#:~:text=Contact HMRC,if you cannot afford this.

thelibrarian11

I do owe more than £5k, I might be able to get it just under £5k with what I have, but I don’t think I could clear £5k in a year with my other debts. The year after, yes, because I will have finally paid most of them.

stu12345_2

your dmp is flexible and can be extended and monthly amounts reduced cos of the HMRC debts now 

hmrc debt takes priority over consumer debts repayments
who is running your dmp

thelibrarian11

This is great advice, stepchange, I'll have to do token payments for a bit won't I? How does my car finance fit in? I have about 10 months left on it, selling it would cover what I owe and I'd break even and have no car but no chunk of money either.

stu12345_2

I think if you set up a payment plan with HMRC showing your outgoings and income and include the car payments and the dmp payments.

your dmp payments will have to drop now to include the HMRC repayment , so it's a case of contact HMRC and you dmp.provider

think you can continue on normal car payments , nobody is forcing you to sell it

Grumpelstiltskin

OK Do not mess with HMRC they are a pain if you do.

Also do not think about a loan that would just be moving debt to one with a higher rate of interest.

Contact Stepchange and tell them you will have to cancel payments to them for a while and get a payment plan with HMRC and stick to it.

Are you still doing self employment? If so you will have to think about the next tax bill and get something sorted for that.

thelibrarian11

Is a joint DMP a thing? Me and my husband have 2 separate ones, but I do our budget together. Those payments would clear my tax debt in a year if I switch to all token payments, our credit ratings are already through the floor and we're in social housing so it won't make a difference.

Grumpelstiltskin

Don't even bother with token payments on your unsecured debt, concentrate on HMRC.

thelibrarian11

Yes still self employed but no guarantee of any work and it varies, it's so hard to hang onto the money I think there’s something happening in my mind when I see my kids going without and I've got the tax money set aside just sitting there, I find it so hard, I start thinking about how they're suffering because I'm such an idiot. As I pay some other debts down, like my car, it will get easier to do, and I think my tax bill will be smaller next year too, like I won't have to pay back child benefit did they change the threshold? I plan on learning much more about this stuff this year, I've been so stupid going into this understanding nothing.

thelibrarian11

So in my mind, I'd pay for my car and then HMRC, and nobody else gets anything until HMRC is cleared. Once the car is paid that money will also goto HMRC. If this is what you think is the best way, I could clear this in less than a year you know. This is assuming no further freelance either, which could also go towards it. Oooh some relief is happening!!! You are all just amazing!